Jim Murphy: My right hon. Friend raises an important point, and he has raised it many times before. I will of course look into the points that he raises, but the wider point that he makes is a fair one. MOD contracts are of great importance to Scotland and its economy, especially the new aircraft carrier orders. It is a fact that Royal Navy orders have ensured years of work in Scottish shipyards, which is of great importance to current workers and those on apprenticeships. It is a very welcome investment indeed.

Nicholas Clegg: Yesterday, the Prime Minister gave a speech on education and young people. It was his big chance to show that he still has some big ideas for the country: to explain why one in three 11-year-olds still cannot read or write properly; to explain why we have more young people than ever before in prison, in debt or on anti-depressants; and to explain why under his Government we have the unhappiest children in the developed world and a care system in crisis. So, how is a bit of tinkering with the schools complaints procedure going to fix any of that?

Gordon Brown: My right hon. Friend is absolutely right. We are doing everything that we can to protect jobs and help people into jobs. Some 350,000 people, who did not receive tax credits before, now receive them to make up for the short-time working that they have to undergo, and we are trying to help people who are unemployed to get back to work as quickly as possible, given that there are almost 500,000 vacancies in the economy. What will not work is doing absolutely nothing and failing to help the unemployed. I must tell my right hon. Friend that, in the Budget, the Chancellor was given an estimate that if we had refused to take action, 500,000 more people would either face unemployment or be unemployed. That is the difference between Conservative policies and Labour.

Celia Barlow: This weekend, I witnessed the great escape of Brighton and Hove Albion in securing its place in the first division. Its next goal of championship football is boosted by construction under way at Falmer Community stadium, which will eventually provide 66 apprenticeships, not mentioning those involved in building it. That is a stark contrast to Brighton and Hove city council—

Gordon Brown: I know very well about the issues in Blackpool, about the importance of learning, education and training and about the big plans that exist in Blackpool to extend further education. We have put aside an extra £300 million of capital funding for further education colleges. We are now working with the Learning and Skills Council to deliver swift resolution to these issues. Since 2001, 700 projects at 300 colleges have been funded. I have to say that in 1997 not a penny was going to investment in further education colleges. Over this spending period, as a result of the announcements in the Budget, we will be spending £2.6 billion, and I hope that my hon. Friend's colleges will benefit.

Developing Country Debt (Restriction of Recovery)

Sally Keeble: I beg to move,
	That leave be given to bring in a Bill to regulate the recovery of the defaulted sovereign debt of developing countries; and for connected purposes.
	This small Bill touches on some of the big issues of our times: the unbridled profiteering of some financial institutions; the pressing need for regulation of the excesses of those institutions; and the gulf between their massive wealth and the desperate poverty of millions of people in developing countries. The Bill aims to put some simple regulations in place to stem the worst of the abuses by the vulture funds that profiteer from the debts of some of the poorest people in the world.
	The economic crisis has already highlighted the flaws in the global financial system, which we all recognise is in need of reform. It has revealed widespread under-regulation of various financial market actors, including hedge funds and other investors. There is agreement across the House that regulation that is too "light touch" has not served us well, and that more controls are needed to ensure the standards of probity that we expect in the UK as a world centre for financial services. That includes the regulation of hedge funds, and just this week there have been proposals from Europe in that regard. This Bill, therefore, is being proposed against the background of the Government's commitment to act to regulate financial services.
	Another aspect of the background to the Bill is the Government's outstanding commitment to dealing with developing country debt, which is greatly undermined by the activities of the so-called vulture funds. The Bill is aimed directly at those companies and funds that buy up defaulted sovereign debt at highly discounted prices, then try to recover the full amount, plus costs and fees, through the courts—often, unfortunately, through the UK courts.
	The funds are often based in tax havens and are secretive, and it is the secrecy as well as the profiteering that this Bill seeks to address. One of the most notorious cases is that of Donegal International Ltd, which set its sights on Zambia. An excellent investigative report by the BBC's "Newsnight" programme revealed the full extent of the scandal.
	Zambia was provided with a loan to buy some tractors, but by the 1990s it was unable to pay the money back. The country was in the process of trying to find a settlement with the creditors for the debts, but the fund purchased the debt for the knockdown price of $3.3 million in 1999. It proceeded to pursue Zambia through the UK courts for the full amount of the debt, plus interest and fees, demanding an astonishing $55 million in total. The courts awarded a total of $15.5 million, more than five times what the fund had paid for the debt—money that could have been used to train doctors, nurses and teachers, or to build hospitals. A big chunk of it, enough to pay for 30,000 primary school places, ended up in the hands of a secretive, unaccountable private fund.
	That is not an isolated case. A current example involves the Democratic Republic of the Congo and a company called FG Hemisphere, which has been awarded $100 million against an original claim of $44.1 million. In addition, Argentina is being pursued through the UK courts for $285 million. Such activity undermines UK and international efforts to reduce the unsustainable debts of developing countries.
	Our Government have been at the forefront of driving through the cancellation of the debts of some of the poorest countries. We have contributed to the programme of debt reduction for 35 countries, 29 of them in Africa, providing a total of $51 billion in debt relief.
	Debt relief and cancellation have allowed the release of funds for spending on social projects in the countries involved. Thousands of new schools and classrooms have been built as a result, and there has been investment in water systems, teachers, health care projects and many other programmes. Many of Zambia's creditors, including the UK, agreed to cancel their debts on the understanding that the funds would be used to reduce poverty among the very poor, and not to provide a huge and completely undeserved payday for the very rich.
	Thanks to the Jubilee Debt Campaign and the "Newsnight" exposé, some action was taken by the UK and other countries to reduce the risk of sovereign debts falling into the hands of vulture funds. Agreement was reached with the World Bank to help poor countries buy back their commercial debts at a discount. In addition, the board of the Africa Development Bank agreed to endorse the establishment of an independent legal support facility to advise countries on how best to tackle vulture fund activity. However, the global economic downturn has produced more debt problems in the developing world; hence the need for this Bill.
	The Bill has four main provisions. First, it would stop the excessive profiteering by preventing financial institutions and companies from buying up developing countries' debts at cut-rate prices, then suing the country's Government through the UK courts for the full original amount of the debt. The Bill would limit the maximum recovery amount to the sum paid by the financial institution, plus a simple rate of interest and charges specified in the Bill.
	Secondly, the Bill would introduce accountability. It makes provision for controls on recovery actions and introduces reporting requirements. The financial institutions—the vultures—would have to get permission from the UK courts before starting recovery proceedings in the UK for any amount of defaulted debt from a developing country. In addition, the vulture would have to ensure that a copy of the application went to the UK Government and to the UK representative of the developing country's Government.
	Thirdly, the Bill would ensure greater transparency. It would shine a light on the vultures and require the financial institutions to disclose the beneficiaries of the recovery proceedings. It has been completely impossible to get information about this in the past. We have been unable to find out who has benefited from some of these huge undertakings involving recovery actions pursued through the UK courts.
	Fourthly, the Bill would help to combat corruption. It contains anti-corruption measures that would require a vulture fund to declare any payments or gifts given by it or its colleagues to the developing country's Government.
	I would like to pay particular tribute to the colleagues in the House who were active in putting their names forward to support the Bill. I would also like to thank the Jubilee Debt Campaign, which first brought this subject to light, and which has worked tirelessly to keep debt at the heart of the international debate on poverty and economic justice. I would also like to thank the Clerks in our Public Bill Office, who did a phenomenal job of drafting the Bill. Similar legislation is being introduced in the US Congress, and I hope that the special relationship that exists between our two countries will extend to dealing with this very unacceptable face of capitalism.
	Over the past months, we have all been appalled by some of the extraordinary greed of the financial sector—Fred Goodwin's pension springs to mind, among other things—but the impact of these vulture funds on developing countries is far worse than anything that we see here in the UK. About two thirds of Zambia's 12 million people live on less than $1 a day. They are truly the poor of this world. The amount of money that one single vulture fund tried to get from that country would have been enough to keep all those very poor people going for five days—a full working week. That level of profiteering is well in excess of anything that we have seen in the UK, and it is wrong that this country, which has such a proud record on international aid and debt relief, should be used as a haven for secretive and exploitative funds operating without scrutiny or regulation.
	After I have presented the Bill today, we will be discussing in our debate on the Finance Bill the impact of the excesses of the banking system on our own economy. My Bill deals with the consequences of those profits on some of the poorest people in the world, and I hope that the House will give me permission to introduce it.
	 Question put and agreed to.
	 Ordered,
	That Ms Sally Keeble, Sir Gerald Kaufman, Hilary Armstrong, Mr. Peter Lilley, Andrew Stunell, Mr. Andy Reed, Tom Brake, Mr. David Drew, John Austin, Mr. David S. Borrow, Mark Lazarowicz and John Bercow present the Bill.
	Ms Sally Keeble accordingly presented the Bill.
	 Bill read the First time; to be read a Second time on Friday 12 June and to be printed (Bill 91).

Stewart Hosie: I agree entirely, as I think that cutting budgets in the teeth of recession is very foolish and that fiscal stimulus is essential as monetary policy alone is not enough. Why, then, is the Chief Secretary cutting £500 million from the Scottish budget next year, when everybody knows that the UK and the world economy will still be in recession? Why is her Government taking such a foolish measure, which runs against her own argument?

Yvette Cooper: The hon. Gentleman knows that that is simply not the case. In fact, we are increasing the Scottish Executive's budget by more than £2 billion over the next few years. We expect the Scottish Executive to make efficiency savings in 2010-11. Indeed, if the Scottish Executive set the same efficiency targets that Welsh, Northern Ireland and English departments have set—of around 3 per cent., instead of the 2 per cent. set by the Scottish Executive—the additional efficiency savings could be used to support the economy in Scotland as well as across the rest of the country.
	The Bill provides for a series of measures—many of them temporary, many of them funded by short-term increases in borrowing as part of the fiscal stimulus that the Government have outlined—to help the economy right now. Clause 9 thus legislates for the temporary VAT reduction to 15 per cent. to run until the end of this calendar year.

Yvette Cooper: I will give way once more to the hon. Gentleman, but only if he will tell me why he opposes a VAT cut that supports business, about which the chief executive of Tesco said:
	"The VAT reduction last November was worthwhile. It gave £8-10 billion directly to consumers and as a result helped small businesses in particular."
	Will the hon. Gentleman explain why he wants to take that £8 million to £10 million away from businesses, including small businesses, right now?

Tobias Ellwood: I am grateful for the Chief Secretary's generosity in giving way again, but she has been here longer than I have, and she is aware of the conventions of the House. If she wants us to answer the questions, let her party call a general election, and we shall be delighted to do so.
	Let me return the Chief Secretary to my original question, which has nothing to do with Tesco other than the fact that Tesco is likely to be open on the evening of 31 December, at the end of the year. Please will she consider moving the date on which the VAT rate is returned to 17.5 per cent. to 3 January? That is a simple question. Will the Chief Secretary answer it directly, rather than taking us down another alley?

Yvette Cooper: The hon. Gentleman makes an extremely important point. He is right that this started with the global credit crunch and the restrictions on credit for companies across the country. As a result of the additional support we have given, particularly to RBS and the Lloyds group, clear lending agreements are now in place, under which lending must be substantially increased compared with last year. We are monitoring those lending agreements very closely. We are also working with other lenders across the country, because lending by foreign banks has dropped by more than £100 billion since the credit crunch began. The issue clearly goes much wider than the major banks that I have just mentioned.
	The hon. Gentleman might also be interested to know that the Department for Business, Enterprise and Regulatory Reform is holding regional engagement meetings and events, bringing together senior regional banking executives and regional businesses to discuss how lending operates locally and to try to improve that.

Sally Keeble: My right hon. Friend has talked about people on high incomes. Will she reconfirm the Government's commitment to halve child poverty by 2010-11, and say how they will achieve that?

Graham Stuart: Merely making progress towards a target for next year is simply not good enough. It is time that the right hon. Lady came clean with the British people. The promise was made to halve child poverty by 2010. The right hon. Lady should tell the House and the people of this country now: is that target going to be met?

Greg Hands: The Chief Secretary to the Treasury may want us to meet a target by 2010, but she can do that only by calling a general election, in order to allow us to have a change of Government. How does she square what she is saying about child poverty with what the Treasury Committee has said in the report that it published today? It said:
	"We are concerned by the lack of any substantial measure to combat child poverty in both the Pre-Budget Report 2008 and Budget 2009. On current indicators the Government will fail to meet its 2010—11 target by a significant margin."

Robert Smith: The Chief Secretary has been talking about maximising the income for the Government. One of the major sources of corporation tax is the oil and gas in the North sea, but tax is paid on it and it provides jobs to my constituents only if it comes out of the ground. The Government have moved a little way with the field allowance in trying to encourage investment in very marginal fields. Why have they not gone further in recognising the banking crisis, the credit crunch problems and the cash-flow problems by examining the industry's request to bring forward tax relief early for new entrants who do not have income at the moment, in order to encourage them to invest? They are the lifeblood in respect of bringing that new oil and gas out of the ground, and without that there will not be the future revenues.

Philip Hammond: Well, that was quite a rant. The Chief Secretary has obviously decided that if she cannot defend her own policies and record, the best thing to do is to come out of the bunker spraying fire in all directions and hoping to get away with it. We will take no lectures from her or anyone on the Treasury Bench about the economy and the challenges ahead of us.
	The overwhelming sense that I got from that speech, and indeed from the interventions from Labour Members, was that they simply do not get the scale of the crisis that they have created and the challenges that it may fall to others to pick up in an attempt to put this country back on its feet. Hon. Members might be forgiven for experiencing a sense of déjà vu today. It is only last week that we were debating—and unravelling—the Budget. Now we must debate a Finance Bill that was published only last Thursday. Outside experts have scarcely had a chance to digest it, but it will be forced through the House at a pace dictated by the political decision to delay the Budget until after the G20 meeting, rather than by the needs of good government and proper scrutiny. It was a political decision to delay the Budget until after the G20, because the Prime Minister had intended to announce a major fiscal stimulus, which he could present as part of a wider plan delivered by him on his saving the world agenda. That plan was dashed by the Governor of the Bank of England on 24 March when he gave evidence to the Treasury Committee and told the Prime Minister what we had been telling him for months— [ Interruption. ] The hon. Member for Taunton (Mr. Browne) is right—Britain's credit card is maxed out and the Prime Minister cannot borrow his way out of trouble.
	We have déjà vu in another sense. Last year's Finance Bill Second Reading was dominated by the Government's attempted sleight of hand on the 10p tax rate and the growing rebellion on the Labour Benches as the impact of that broken manifesto pledge became apparent to them. This year, the split in the Labour party is caused not by any sympathy for the targets of the distraction taxes in the Budget, but by a tug of war for the heart and soul of the Labour party between the adherents of new Labour's embrace of aspiration and the exponents of the politics of envy as the most expedient tactic for a Prime Minister who is already up to his armpits in political mire and sinking fast.

Philip Hammond: I promise the right hon. Gentleman that I shall look carefully at his proposals. In disappointing contrast to last year, we have not had the opportunity of a discussion ahead of the debate on the Floor of the House to consider what we can do together to press the Government on these matters.
	A quick glance at the record of last year's Second Reading debate will suggest that we do not need to take the words that we have just heard from the Chief Secretary too seriously. Last year, she told us that it was impossible to change the personal tax system and personal tax rates in-year, but when it became politically beneficial to do so, she found a way. She told us that the British economy was well placed to weather the global storms, that claimant count unemployment was at its lowest for 30 years and that the UK would be the fastest growing economy in the G7. It seems that hubris is capable of human to human transmission, at least in the closed confines of a political bunker.
	The Chief Secretary also told the House last year that the Government were using the flexibility of the fiscal rules to borrow more in a sensible and sustainable way. What she did not say was that shortly after the Finance Bill became law, the Government would use the flexibility of the fiscal rules to abandon them altogether before they were comprehensively shattered by the growing crisis in the public finances that will be this Administration's legacy.
	If we fast forward to this year, we may be making modest progress, because I do not think that I heard the Chief Secretary describing the £175 billion that the Government will borrow this year and the £173 billion that they will borrow next year as sensible and sustainable. Last year it was the denial Budget—no one would be worse off as a result of the abolition of the 10p tax rate—and this year it is the distraction Budget, with a subliminal message that taxing the rich can resolve the gaping hole in the public finances as the Government desperately try to divert attention from the reality of the Chancellor's package. It is a reality of tax rises for the many not the few and of spending increases before an election to mask a programme of massive cuts afterwards. The Budget has a £45 billion hidden tax bombshell aimed at the many and timed to go off after the general election that even this serially unelected Prime Minister will be forced to concede to the British people by this time next year. That is £1,430 per family of extra annual taxes, and I confidently predict that he will not remind the public of that in the run-up to that election.

Philip Hammond: I shall come to that point in a moment, but the simple answer to my hon. Friend's question is no, I do not know anyone else who believes these forecasts. While he is on the subject of cycles, as I have said before, I think the only cycle that the Prime Minister understands or is interested in is the political cycle, and our economy is being run with regard to the political cycle, not the economic cycle.
	The Chancellor, in his Budget, was therefore torn between a desire to hide from the electorate the scale of the adjustment that would be required until after one more election, and a desire to send a signal to the bond markets that would induce them to continue funding the Government's unprecedented borrowing requirement. So what we got was the usual fudge: optimistic growth projections that unravelled within minutes of the Budget and have been further undermined by the Office for National Statistics data published since, and tax increases for ordinary families now, but with much, much more to come after the election, starting with the tax on jobs that will hit everybody on £20,000 a year or more in 2011, all under cover of the smoke generated by the 50p distraction tax "on the rich", designed to fool the gullible.
	We also got a slashing of planned public expenditure growth. After allowing for the increased cost of servicing the huge pile of debt that this Government are building up, and of benefits for those joining the dole queue, there will be real-terms cuts equivalent to 2.3 per cent. in departmental expenditure totals. That is on top of the halving of capital expenditure budgets. It is an unprecedented scale of cuts in departmental expenditure. All this from a man who told us in 2005 that further efficiency savings were not possible, and that any reductions would necessarily involve cuts in front-line services. He was wrong then, and I suspect he would wish to argue now that he was wrong then. The fact is that a Government who said no further efficiency savings were possible subsequently claimed to have made £26 billion-worth of efficiency savings, and to have identified a further £15 billion-worth of efficiency savings. They have no credibility left on spending: no one believes a word they say any more.

Philip Hammond: My hon. Friend is exactly right: it is a distraction Budget. What his constituents do not know, however, because understandably they have not sat and read the detail of the Budget Red Book, is that this is only the start. They will be hit by a further £45 billion a year of taxes as the Chancellor struggles to close the gap that his disastrous policies and those of his predecessor have opened up. Even if we accept the highly optimistic assumptions about the pattern of tax receipts in the recovery, the Chancellor still acknowledges that it will be 2017 before the current Budget is back in balance, and 2032 before our debt is back under control.
	One clear victim of this Budget is the credibility of Treasury forecasting. The whole process is undermined if nobody, but nobody—except the Chancellor—believes the forecasts for growth and for tax revenues. The case for an independent office of budget responsibility was made by the Chancellor's Budget speech more effectively than any of its proponents could have hoped. No Chancellor in future should be able to build his Budget on foundations of sand—to treat the Budget process as a political manoeuvre rather than an exercise in fiscal responsibility. We will attempt to insert into this Finance Bill provisions to ensure that before next year's Budget, a rigorous and independent approach to forecasting is established, ending the farce that we witnessed on Budget day, as the Budget growth projections unravelled before our very eyes, rendering the entire Budget Red Book almost immediately redundant.
	I have some specific issues to raise on several clauses, but first I should like to set out three key themes linking our main criticism of the Bill: first, its failure to rise to the challenge of building the competitiveness of the UK as a place to do business in the recovery; secondly, its failure to support savers at a time when rebuilding the savings culture will be critical to Britain's future; and thirdly, its abject failure to balance the rights and responsibilities of taxpayers and the Revenue as it extends and expands Revenue powers. I shall elaborate on each.
	Britain is in the depths of the worst recession since the second world war. Unemployment is rising at the fastest rate since records began and the public finances are set next year for a bigger deficit than that of any other G20 country. But even in these circumstances, this should have been a Finance Bill for the recovery. We do not know when it will come, but we need to be sending powerful signals to business about the tax landscape in the UK in the future, to ensure the investment and the jobs that Britain will need when Labour's recession is over.
	Rebuilding Britain's competitiveness should be the key focus of this Bill—and, of course, competitiveness requires a regime that ensures fiscal discipline in the future as the bedrock on which a strong economy can be built. It also means addressing the long-standing challenges that Britain faces in productivity, infrastructure and skills. It means modernising Britain's public services and its welfare system, but it also means ensuring a competitive tax system. That is not just about the quantity of tax, important as that is. Business understands that the disastrous fiscal position that the country faces means that there is no immediate prospect of moderating the overall tax burden, but powerful, revenue-neutral signals can still be sent, even at a time of intense fiscal pressure. The nature of the tax code, the certainty of its impact, the manner of its making and the clarity of its future direction all contribute to tax competitiveness.
	In a global marketplace, Britain will never be able to compete on tax burden with emerging economies with limited social infrastructure, but we can and must compensate for our higher taxes by offering a more stable and predictable regime with greater transparency and more certainty—in short, the benefits a business might expect from locating in a higher-tax, mature jurisdiction. What we cannot do—it is simply not an option—is expect to be able to levy developed-country tax levels with the uncertainty, arbitrariness and unpredictability more usually associated with the tax regimes in developing economies.
	Ten years ago, the Prime Minister set out his three principles for the UK's tax system: simplicity, fairness and competitiveness—a long-term, strategic approach to business taxation. However, what we have had in the last few Budgets is the very opposite: a shambles of initiatives, often half-baked, often unworkable and often reversed during the legislative process or thereafter, some of them—the 2007 pre-Budget report springs to mind—literally put together on the back of a fag packet in response to immediate political pressures. We have seen the abolition of the 10p tax rate, the fiasco of the non-dom tax charge and the disaster of the capital gains tax taper relief abolition—and the pattern continues.
	If we cannot reduce the tax burden on business, we have to redouble our efforts to reduce the compliance burden to maintain Britain's global competitiveness. Sadly, the Bill is a missed opportunity, at a crucial moment in our economic history, to send those powerful positive signals. It will further erode Britain's standing as a stable, predictable and business-friendly jurisdiction in which to operate.
	I now turn to the second theme, pensions and savings. The economy that will rise from the ashes of this recession will differ in shape and structure from the pre-August 2007 economy. It will be built on equity, not debt. It will depend on our savings ratio, not our borrowing capacity. The Prime Minister appeared to understand that important shift. As recently as last month, he was hinting in radio interviews that he would do something for savers in the Budget. What we got was a limited, complex change to the individual savings account regime that the industry has condemned as burdensome and confusing, and some very ambiguous signals on pensions that will further undermine long-term saving; I will return to those in a moment, when I address some specific provisions of the Bill.
	There was nothing in the Budget to match the Leader of the Opposition's bold proposal for this year's Budget. He proposed the abolition of income tax on savings income for basic-rate taxpayers, and an immediate increase in the pensioner tax-free allowance of £2,000 a year—all funded by advancing to the current year the introduction of the efficiency savings that, in the pre-Budget report, the Chief Secretary to the Treasury announced that she had identified, although apparently she could not bring herself to deliver them until after a general election. Let me be clear: it is not a fiscal tightening to take taxpayers' money back out of the pocket of Government, and redistribute it to hard-pressed taxpayers with a high propensity to spend—people, in particular pensioners, whose savings income has been very much squeezed, in some cases leaving them almost at the point of destitution. On that second count, the Bill fails miserably to rise to the challenge of shaping and building the new economy based on savings and equity, not mountains of excessive debt and easy credit.
	Thirdly, the Finance Bill advances still further the Government's agenda of enhanced powers and increased discretion for Her Majesty's Revenue and Customs. With additional powers should come additional responsibilities, and if Britain's business tax regime is to remain competitive and internationally attractive, the extra powers have to come with proper safeguards, and have to be matched by obligations on HMRC. The concept of a taxpayers' charter, setting out the rights and obligations of taxpayers and the Revenue, appears to be dead. In clause 91, it becomes an HMRC charter—nothing much more than a mission statement prepared and delivered by HMRC, setting out its aspirations. That is a far cry from the statement of rights and responsibilities for both taxpayers and Revenue authorities to which many thought that the Government were committed.
	Let me make it clear to the Chief Secretary to the Treasury that we will support the creation of powers that HMRC genuinely needs to prevent unlawful tax evasion and to counter complex tax avoidance, but the burden on ordinary, law-abiding taxpayers has increased exponentially over the past decade, as Britain's tax code has doubled in length to overtake India's as the longest in the world. We need a focus on the simplification that the Prime Minister promised, and pressure on the Revenue to deal fairly with taxpayers. For example, we could match the new restrictions on time for reclaiming overpaid tax with an obligation on HMRC to make prompt repayments.
	I would like to address a number of clauses in the Bill, making specific observations and putting questions to the Financial Secretary to the Treasury. Clauses 4 and 6, to which the Chief Secretary has referred, introduce the withdrawal of personal allowances on incomes above £100,000, and the multiple additional tax rates that will be required to give effect to the 50p tax proposal, which is to be introduced next year. We on the Conservative Benches—and, in fact, some on the Labour Benches—know the Prime Minister's motive in seeking to create another of his beloved dividing lines. It is a political gesture; he is throwing some red meat to the heartland vote as he abandons any pretence of reaching out to aspirational Britain ahead of the next general election. The right hon. Member for North Tyneside (Mr. Byers) was correct to say that the measure
	"has more to do with political positioning and tactical manoeuvring than a principled, strategic approach to taxation and the raising of revenue."—[ Official Report, 27 April 2009; Vol. 491, c. 615.]

Philip Dunne: My hon. Friend is making an extremely powerful point. Does he acknowledge that the types of people whose assets are held in trust who might be caught would include victims of injuries who have been the beneficiaries of compensation arrangements? Many of them may be miners, and may suffer from appalling disabilities. Their assets are held in trust to protect their financial position. Most of them would not be higher-rate taxpayers.

Philip Hammond: My hon. Friend articulates the case passionately, and many Members from all parts of the House look at the challenges to the bingo industry and pubs in the same way: a vital piece of the community's infrastructure is in jeopardy, and that will change for ever the nature of the towns, villages and communities in which we live.
	Clauses 23 and 24, I am pleased to say, introduce a welcome if limited carry-back of losses for an extra year—restricted to £50,000—and the accelerated first-year capital allowances for one year only. Those measures are welcome, but because of the lack of available credit, many small and medium-sized enterprises will be unable to take advantage of the incentive to invest, even if they see market conditions improving—something that yesterday's CBI figures suggest is still a way off. I say to the Chief Secretary to the Treasury that fiscal incentives are fine, but the plight of many, if not most, of those companies is rooted in the credit squeeze, and until they and their customers can secure access to normal lines of credit on normal terms, we will not see a recovery. It is true that quantitative easing is forcing money into the system, but a massive public debt issuance and the continued solvency crisis in the financial sector ensure that very little of that easing is getting past the Government and the banks and out there to the SMEs in the real economy that so desperately need it.
	Clause 27 makes some minor changes in respect of venture capital trusts. The Government will be aware of calls for a more radical approach, expanding the scope of such trusts to allow them to invest in a wider range of companies and in the secondary market, and helping to provide the liquidity that is currently absent. Despite the rhetoric, the Government have not resolved the crisis in credit markets, and they have failed to get normal bank lending to SMEs flowing again, as banks unsurprisingly focus on rebuilding their balance sheets over supporting their customers.
	However, here is a suggestion from industry to improve access to a source of equity capital for SMEs, especially those listed on the alternative investment market, and to deepen the market in such equity capital by including secondary market activity in the scope of VCTs. I raise the issue because the European Union recently—I think it was only last Wednesday—approved venture capital trusts for state aid purposes, and the Government's position to date on VCTs may have been partly driven by an uncertainty about whether any different approach would be permitted under state aid rules. I therefore hope that the Financial Secretary can this evening clarify whether the Government are able to consider going further to support SMEs in that way.
	I welcome, too, clauses 34 and 35 and the schedules that they introduce, finally delivering the foreign profits exemption regime and the associated cap on interest deductibility that has been promised or threatened—depending on which way one looks at it—for some time. We believe that the measure will broadly help British-based international businesses in the recovery; it is just a shame that the context for that positive mood on corporate tax is a Bill that contains a raft of measures on other areas of the tax regime which is bound to make Britain less attractive and thus dilute that positive impact.
	Business is generally satisfied with the proposals in clauses 34 and 35. The CBI has, none the less, laid down a marker whereby it thinks that further details could usefully be discussed before the interest cap regime comes into force, but the delay to its enforcement allows for that possibility. There is a lesson that we should learn from the package, because the initial proposal was vigorously opposed by business, which considered it to be damaging to Britain's international competitiveness, but the end result has been broadly welcomed. That is an example of how proper consultation and debate between business and Government can deliver what this country needs both to make its tax regime competitive and effective and to allow us to maintain our prosperity in a globalising market economy.
	The Financial Secretary should take an important lesson from that example. In future, Government should tell business well in advance—at least at the pre-Budget report preceding a Finance Bill—the outcome that they require of a measure. However, the Government should not be prescriptive about how the measure is delivered; they should sit down with business to establish the best, least damaging and most competitiveness-enhancing—if I can say that—way of achieving their objective.
	Clause 71 introduces schedule 35, which provides for a new tax on the pension contributions of higher earners. It effectively removes the principle of pension contributions being made from pre-tax income. The A-day regime for pensions, which has been referred to in the context of the Opposition amendment, was introduced only in 2006. What was meant to be a long-term regime for long-term saving is being significantly tinkered with, and the signal is being sent out that the settlement is not the enduring fixed landscape that it was billed to be back in 2004, when it was first mooted.
	The measure introduces more complexity and uncertainty; long-term commitments are being overturned for short-term gain. I have already acknowledged the Government's concern that the 50 per cent. rate of tax makes pension tax relief an obvious route for legal avoidance; that is why they have sought to limit the availability of tax relief to the highest earners. But why on earth did they not do that in the simple and obvious way—albeit one that would also have breached the A-day commitments—of changing the maximum contribution limits under the A-day regime?
	How can it be fair or reasonable that, under the regime proposed by the Chief Secretary to the Treasury, someone earning £150,000 can get 40 per cent. relief on a £100,000 pension contribution—that is, £40,000 of relief from the Exchequer—but someone earning £200,000, and contributing only £20,000 to a pension fund, is limited to 20 per cent. relief? That perverse outcome risks sending a signal of instability and unreliability throughout the pension regime. It risks a disengagement of top earners from company pension schemes that also benefit tens or hundreds of thousands of lower-paid workers. I am not convinced that disengaging top executives from pension schemes that benefit the many is the best way to protect those schemes.
	Many savers will see the measure as the thin end of a wedge, reinforcing Labour's attack on pensions which began in 1997 with the £5 billion-a-year tax raid on pension funds. That has undermined what the right hon. Member for Birkenhead (Mr. Field) has described as a pensions system that was once the envy of Europe, but is now arguably one of the least good on the continent.

Philip Hammond: I have recognised that the Government had a legitimate motive for moving to limit tax relief on top earners in the context of a 50 per cent. tax rate. However, the right hon. Lady has not answered the question that I put to her: does she think it fair that someone earning £150,000 can put £100,000 into their pension fund and get full relief at 40 per cent., but someone earning £200,000 and putting £20,000 into their pension fund cannot get relief above 20 per cent.? That does not seem fair either.
	Will the Financial Secretary confirm one issue in his winding-up speech? There is a great deal of concern in this country about the growing apartheid between private and public sector pensions. I want him to confirm whether in unfunded final salary pension schemes the value of the notional contribution that is subject to the tax clawback will be based on an actuarial calculation. Will the value of that contribution be added to gross salary for the purpose of calculating the £150,000 threshold? Take as an example a senior civil servant on £120,000—actually, they might be a middle-ranking civil servant on that salary these days. The real value of their pension rights imply an annual contribution of, say, £35,000. How will that be treated to ensure a level playing field between unfunded public sector pension schemes and private funded schemes?
	On the anti-forestalling regime, which has understandably been put in place to prevent people taking advantage of the delay in the implementation of the arrangements by making very large contributions to pension funds, does the Financial Secretary recognise that what is proposed penalises those who are not making regular payments, at least quarterly? Does that not betray a certain mentality in Her Majesty's Revenue and Customs—that the people to be looked after are those in the pay-as-you-earn system in 9 to 5 jobs? Does it not betray a woeful failure to understand the lives and lifestyles of the self employed, those who have irregular incomes and people whose incomes depend on the success of the small businesses that they run? Such people are typically advised to make annual or semi-annual contributions to their pension funds, but they will be excluded from making their usual contributions under the arrangements that the Financial Secretary has set out. This may be another case of HMRC having pulled the wool over Ministers' eyes. Will the Financial Secretary consider the matter urgently and give an assurance tonight that he will ensure that those who have made regular contributions in the past—even if they have not been as frequent as quarterly contributions—will not be inadvertently caught by the anti-forestalling measures?
	The Bill risks being a missed opportunity to prepare Britain for economic recovery in a climate of continued fiscal restraint—a world where equity and saving will replace excessive debt and easy credit, and where green industries, local, close-to-market manufacturing and new services will rise to balance out Britain's over-dependence on the financial and property sectors and on public spending growth. It is not too late; substantial—one might even say fundamental—changes have been made in previous Finance Bills as a result of parliamentary pressure and belated attention to outside experts. I hope that that will happen this time.
	A strong and powerful signal needs to be sent that Britain is open to the world for business and that in the recovery we have resolved, despite our problems, not to look inwards and withdraw from the challenges of global competition, but to embrace those challenges. We need to signal that we are determined to create the competitive, world-class business environment that will attract the jobs, trade and investment to secure Britain's prosperity well into the 21st century. To do that, we need continuity, simplicity, fairness, transparency and certainty in our tax regime. The Bill does not achieve that, and this Labour lot cannot achieve it. Change is needed so that Britain can begin the process of rebuilding an economy shattered by Labour's recession.

Frank Field: Absolutely, and of course that will be a start, but important though our budget is to taxpayers at the moment, it is small compared with the budget that we will be paying out mid-century—£90 billion, unless we make changes. We could just say in a rough and ready way that we are closing schemes, or we could have serious pension reform and consider that the only task of Government is to get a scheme that takes everybody out of poverty in old age providing that they have been decent citizens. We could then say to people, "It is being closed, but nobody will be pushed into poverty as a result. What you add on top is your concern, not ours. We are not even going to lecture you about it, and we are certainly not going to bribe you to do it."
	With those moves alone, the means test budget of £15 billion and rising would be set on a downward course. The Chief Secretary told us today that there would be a £30 billion subsidy budget in the tax system for pension savings, and that that budget, too, would go down and then be eliminated. We would prevent future liabilities from accruing in the public sector, although of course we would have to accept the bill for paying off the liabilities that have been earned.
	Surely this House ought to gird its loins and say that this is the sort of debate that we want to have, and that we are going to reshape the nature of government in the next Parliament. This debate could play a key part in that, but it could also act as the longstop and the plan B. If the day came—I hope that it never does—when the Debt Management Office said that confidence had drained away and that we could no longer shove shed-loads of debt on to the market and get it bought, we would already have in place a civilised way of bringing public expenditure and tax revenue back into balance. That would reassure the markets, so that the terrible day would not come upon us when the Government simply could not raise the money to pay the wages that week.

Jeremy Browne: Thank you, Mr. Deputy Speaker, for giving me an opportunity to contribute to our deliberations this afternoon.
	The Budget that gave rise to this Finance Bill was a total humiliation for the Prime Minister himself and for the Labour party generally. The reputation of the former has been destroyed for ever, and the reputation of the latter for at least a generation, and possibly irredeemably. Their self-imposed destruction does not concern me, as they are the architects of their own misfortune and eventual downfall, but what does concern me is the catastrophic impact that this Budget and this Bill will have on our country both financially and socially for many decades to come.
	The context of all our deliberations is debt. That point was made by the right hon. Member for Birkenhead (Mr. Field), and is made in the amendment that he, my hon. Friend the Member for Twickenham (Dr. Cable) and I tabled, and I shall turn to it repeatedly throughout my contribution. I wish to examine what the Government are going to do, and the suggestions being put forward by the other parties to try to tackle that huge burden. The scrappage scheme, the increased alcohol duty and the manifesto-shredding, aspiration-capping 50p income tax rate are all brought about by the need to address our huge public debt.
	The Government of this country are now borrowing £480 million every day. We are borrowing £20 million an hour. Our national debt increased by £12 million during the time that the Chief Secretary took to make her speech opening this debate. I am afraid that it went up by another £21 million while the Conservative spokesman was talking, which makes the rate charged by the Conservative shadow Foreign Secretary seem positively mean-spirited. I shall try to boil those numbers down to understandable levels, because people trade tens of billions as though it were small change. Our debt is clocking up another £1 million every three minutes, and it is a serious and frightening problem. It will rise by £175 billion this year, £173 billion next year and £140 billion the year after that. When the Prime Minister delivered his first Budget as Chancellor in 1997, almost exactly 12 years ago, total Government spending was £322 billion. Now the debt increase alone for the next two years will be £348 billion.
	The Prime Minister used to boast about the golden rule of keeping total debt below 40 per cent. of GDP. Now, according to the Institute for Fiscal Studies, we will not get down to that proportion until I am 62 years old, and I am 38 at the moment. I was going to say that that would be the rest of my working life—but by the time I get to that age we will had to respond by increasing the retirement age significantly. All those assumptions are desperately bleak, but they are, simultaneously, heroic in their optimism.

Philip Hammond: I suspect that I know where the hon. Gentleman is heading, but has not he made the case for some form of independent statutory provision of such forecasts as a backdrop to the Budget? Any Chancellor should make forecasts in response to the real situation that the country faces rather than the fantasy situation that he wishes to paint.

Jeremy Browne: Absolutely. Let us not get too hung up on this issue, but I take the hon. Gentleman's point. There are potential benefits and lessons that we could learn, although all political systems are different. The Treasury Secretary is not an elected politician in the United States—indeed, nobody in the United States Cabinet is, apart from the President and the vice-president—but I understand the hon. Gentleman's point.
	The point that I was making before those interventions was that the Government have presided over extraordinary levels of debt, which we will be paying back until 2032, by the most reliable estimates. Many people—the mood in the country appears to suggest this—think that the Government have run out of steam and served their time in office. The question then arises whether any other political parties have solutions and policies superior to those being put forward by the Government. I know that the Conservatives revel in our national misery and are running around celebrating their election win already, without anyone having yet cast a vote, but let us see whether their record justifies their confidence.
	Boris Johnson, who reportedly shares my concerns about the limitations of the Conservative party leader, wrote in  The Daily Telegraph on 27 April about the Labour Government:
	"It believed its own demented propaganda about ending boom and bust".
	He is exactly right: Labour did believe that demented propaganda. However, the Conservatives believe the same demented propaganda. Talking about the Iraq war vote, it is only now that they turn round and say, "We were so convinced by the sincerity of Tony Blair. We feel very upset that he's let us down." After all, why else would the right hon. Member for Witney (Mr. Cameron), the hon. Member for Tatton (Mr. Osborne) and others have as their central policy—until it collapsed in the past few months—that the Conservative party would "share the proceeds of growth"?
	The only way in which we could share the proceeds of growth indefinitely is by believing that there would be a continual boom and no prospect of bust. If the Conservatives thought that there would be an economic cycle of boom and bust, they would have to say that they would share the proceeds of negative growth, and I never heard a Conservative spokesman once mention that. What the Conservatives said was predicated on the assumption that growth would be permanent. In the debate on the Finance Bill exactly a year ago, I warned the Conservatives of the folly of matching Labour's spending commitments. I said that simply, clearly and in black and white. I was ignored on that occasion, and told that it was an article of faith for the Conservatives to stick to the Labour party's spending commitments, but then, a few months ago, they came up with exactly the opposite policy, having heeded my warning.

Jeremy Browne: I completely agree. That is the point I was trying to make.
	I am pleased that there are members of the Conservative party who have woken up to the dangerous situation. I am not surprised that it took the Conservatives a while. After all—this is the point I was trying to make when I said they had given the Government the covering fire they needed—it was the Conservative party leader who boasted that he was the "heir to Blair", but it was the previous Prime Minister, Tony Blair, who presided over the situation in which we now find ourselves. My message to the Conservatives is extremely simple: we need a change of Government, not an imitation of this Government. If the Conservative party regards itself as the "heir to Blair", our party will have to do better.
	As we were sailing towards the ruinous position that we were in, did the Conservative party warn of the steps that needed to be taken? What was the Conservative leader saying? He was making speeches about sunshine winning the day and claiming that GDP was no longer important, because we ought to be concerned about GWB, which stood for general well-being. GDP was passé; the new Conservative party was not worried about growth. The leader of the Conservative party identified his main priority for retailers, whom we hear so much about, as being where they should locate chocolate oranges in their stores so as not to encourage obesity in their customers.
	As unemployment rises towards 3 million, perhaps the leader of the Conservative party would like to revisit his view that GDP is all in the past. Perhaps he could talk to some of those unemployed people and tell them how old fashioned it is to want the economy to grow. Perhaps he should talk to some retailers, or the former staff of the boarded-up Woolworths stores around the country, about the Conservative party's big priority for retailers, which is not about giving them the opportunity to be competitive, but about politicians micromanaging the exact location of confectionery in stores.

Graham Stuart: I did not think it possible, but the hon. Gentleman is giving the Chief Secretary to the Treasury a run for her money in distorting and caricaturing the Conservative position. At no point did the Leader of the Opposition say that GDP was not important. He has always known the central importance of the economy, but he quite rightly wanted to show that Conservative Members have always been interested in wider social issues too, and in the country's general well-being. I hope that the hon. Gentleman will not again caricature the Leader of the Opposition or the Conservative party in such an unfounded and unfair way.

Rob Marris: I am not sure that we would get progressive politics from a Liberal Democrat party that seems intent on massively shrinking the state. Nevertheless, it is important to debate the size of the state, as we did in the Budget debate and as we are doing on the Second Reading of the Finance Bill, and the kind of things that it provides using taxpayers' money, and that it does not provide, and how it pays for those things.
	Let me draw on my own past by way of illustration. In my early 20s, I spent several years as a truck driver and a bus driver. Thanks to a strong trade union, the Amalgamated Transit Union, in which I was actively involved when I lived in Canada—I continue to be a member of the Transport and General Workers Union and now Unite—we were the second highest-paid bus drivers in the world. In the early 1980s, I was taking home £10,000 a year. I saved a lot of that money, and I went to the Birmingham polytechnic, as it was then called, to study law. I had two years' study at the polytechnic, followed by two years as what was then called an articled clerk. After I qualified, I was a moderately low-paid solicitor before working my way up into partnership. So it probably took me over 10 years to get back to the economic position that I would have been in had I continued as a bus driver throughout that time. But I did get ahead, so that is an anecdote about investing for the future. I think that that is what we and this Government are faced with. Frankly, if the Conservatives were to win the next general election, they would also be faced with the issue of what the state does for the people who live within its borders, first to invest for their futures, and secondly to assist individual residents in investing for their own futures.
	When the Prime Minister was Chancellor of the Exchequer, he talked about abolishing boom and bust. I think we have to be careful about the way in which we use and interpret that phrase. I have to say that I never understood or interpreted the Prime Minister, as he now is, to be saying that through the economic policies of a Labour Government in one country among hundreds, we could abolish the cyclical nature of capitalism. Whether or not one accepts Kondratiev's long waves of about 40 years or alternative models, it is clear that capitalism for the last 250 years, in its fairly modern incarnation, we might say, has always been cyclical.
	My interpretation of the abolition of boom and bust was that it was more about lessening the troughs and lowering the peaks, if I may put in that rather graphic—I use the word in its true sense—way. I think that this Government did a pretty good job of that. We did not have a boom and we avoided the two recessions in the early part of the previous century that were evident, for example, in the USA. We were not booming in the way China or India have been, with 10 per cent. growth. Superficially attractive as that sounds, if we had had 10 per cent. growth, it would have created big strains on our economy and society.
	In this financial year, we are looking at economic contraction of up to 5 per cent. That is absolutely devastating for people who are losing their jobs, for businesses that are closing and for some people's standards of living, but it does mean that 95 per cent. of those in the work force are carrying on working. In terms of where we are as an advanced western industrial capitalist country, we need to bear in mind how deep the trough of this bust is.  [Interruption.]
	I hear a sedentary, almost sotto voce, comment from the hon. Member for Taunton (Mr. Browne) about what all this has to do with the Second Reading debate of the Finance Bill. Well, we are facing difficult times and there are very worrying figures in the Budget about the massive amount of borrowing that is going on, as the hon. Gentleman himself graphically put it when he mentioned £480 million a day and £175 billion of borrowing for this year and almost the same figure next year.
	In examining a proposition, way forward or proposed course of action, however, I was brought up to examine alternative courses of action to test whether the proposed course—whether it was suggested by a parent, a teacher or whoever—was suitable. It is always a question of looking at the alternatives as well as at the proposed course of action.
	When it comes to alternatives, what do we find advocated by the hon. Member for Runnymede and Weybridge (Mr. Hammond), the shadow Chief Secretary to the Treasury? I have to tell him that he put forward a platitudinous position—transparency and certainty in taxation, simplification, a competitive tax regime, efficiency savings, the shibboleth of "tax neutrality" and so forth. They all sound wonderful, but one needs some flesh on the bones. I did not see much flesh being given straightforwardly, but I did see a "drip, drip, drip" in the hon. Gentleman's speech in respect of tax cuts. That is an understandable proposition to advance when faced with our economic situation. I do not think that it is a very good way forward, however; it may be coherent, but I think it is wrong.
	I do not want to be accused of being superficial or platitudinous, so let me mention fuel duty, bingo, corporation tax, inheritance tax for the very wealthy, state aid for venture capital trusts—okay, that is not a tax cut, but a spending commitment—cutting taxes on savers, cutting alcohol duty, not accepting pensions tax relief proposals at the higher rate and not accepting the 50 per cent. top rate of tax, which I agree is not a tax cut; it is a rejection of a tax rise.

Jeremy Browne: I think that the hon. Gentleman is making an entirely legitimate point. Public borrowing is £175 billion this year, so what would it be if the Conservative party got its way and all those measures were rejected in the Bill?

Rob Marris: I am a Labour Member of Parliament. I am not in a position to estimate the size of what I believe are broadly tax cuts proposed by the Conservative party today. I cannot say what the figures are. We were not told the figures, notwithstanding what the hon. Gentleman implied. I can say, however, that if the proposals were implemented they would reduce Government revenues further. Unless Government spending were cut massively, a deficit that I think we all agree is huge and worrying would be even greater.
	There are contradictions in what the Conservatives say we should be doing about taxation and spending. There are the tax cuts to which I have adverted, and there is also the clear implication that the Conservatives would maintain public services. They cannot do that by means of efficiency savings, which is another of the terms that we like to bandy around. I was astounded when the hon. Member for Runnymede and Weybridge belaboured my right hon. Friend the Chief Secretary with the question "Why do you not bring the efficiency savings forward to this year?" That is like saying "Instead of buying a new car next year, why do you not buy one this year?"
	Efficiency savings are not like that, particularly in large organisations. I should have thought that the Conservatives would understand that, given that they are constantly trying to impress on the House how much they know about running organisations. They overlook the fact that some Labour Members have also had significant experience in the private sector and in large organisations. Efficiency savings almost always mean changing the ways in which in which individual human beings work, whether it involves different equipment, different work-flow patterns or anything else. Those things take time. It is not possible to say "We will do them tomorrow, because it is convenient and we will save money." Life is not like that.
	I have described one of the contradictions on the Conservative Front Bench: the tax cuts and rejection of certain revenue-raising measures in the Finance Bill along with the implication that services will be maintained. Another contradiction—of course, we also see it in the other parties; I learnt years ago that all of us, as human beings, have a great capacity to live with huge contradictions in our personal lives and political beliefs—is that Conservative Back Benchers are standing up and asking for measures that would cost a Government money. Dealing with child poverty and increasing spending on international development are laudable activities, but they cost money.
	While Tory Back Benchers are, in a sense, asking the House and their own Front Benchers for further spending commitments, the Front Benchers, in contradistinction, are at best going for stasis and at worst going for cuts. I think that that is a huge contradiction, which needs to be resolved in the Conservative party before it is fit to run the country.

Rob Marris: I agree. I am somewhat surprised to agree with a Liberal Democrat about council spending. I can tell the hon. Gentleman that in May 2008, sadly, a Liberal Democrat-Conservative coalition took control of the council in my natal city, Wolverhampton—the city in which I live, and which I represent—and what is it doing? It is cutting all kinds of things all over the place. It is making millions of pounds of cuts. When either the Liberal Democrats or the Conservatives were in opposition, however, they decried Labour for not spending more.
	That is what happens when a Tory-Liberal Democrat coalition takes control: big cuts are made. I am talking about what happens at the micro level, of course. You will know about it, Madam Deputy Speaker, because you represent an area close to Wolverhampton. That is what happens, and it is what I think would happen if we had a Conservative majority Government after the next general election. What I am saying is not simply conjecture. It is to do with what has been said about the Budget, what has been said about the taxation measures in the Finance Bill, and what is being done in my home town.
	I do, however, agree with a critique of this Finance Bill which has applied to many other Finance Bills. I say that as one who, as some Members know, has had the great pleasure of being a member of six Finance Bill Standing Committees over the years. It is true that we have experienced too many tax changes—not just under the present Government, although they have probably accelerated the process—and our tax regime is too complicated. Part of the reason for its being too complicated is the fact that the rich keep paying accountants to come up with loopholes that they can then exploit, quite legitimately—if, to my mind, often immorally. Those loopholes have to be closed, and the more that are closed, the more complicated are the avoidance schemes that the well-paid accountants come up with. More complicated measures are then needed to close the additional loopholes. The cycle goes on, and the tax books and the tax legislation become thicker and thicker.
	I think that there is more than a grain of truth in the critique that there is too much chopping and changing and the regime is too complicated. I am saying that to my own Government. However, this year's Finance Bill confronts me with a measure that attempts to implement a difficult Budget which was introduced in extremely difficult times. The background to that is the fact that, as I understand it, the accumulated national debt of the United Kingdom doubled between 1992 and 1997, under the last Conservative Government, and under the present Government—my Government—the accumulated national debt will double over the next five years. We have paid off some of it, and the economic expansion took care of some of it, but we are now proposing to double it so that, in round terms, the accumulated national debt will reach an amount equivalent to 80 per cent. of gross domestic product.
	There is no doubt that that is a huge increase. No Labour Member has any illusions on that score. We all know that it will be very difficult for our society and very difficult for our economy. However, I think that we also need some figures with which to compare it—the figures for the accumulated national debts of our main competitor economies. I refer not simply to economic competition, but to building the kind of societies in which I think many of us throughout the House would wish to live.
	When it entered the current world recession, Italy's accumulated national debt—I must confess that I have been to Italy only once, for a long weekend in Milan, which was very enjoyable; I am not a Chiantishire type—was more than 80 per cent. of GDP, while ours, in round terms, was in the low 40s. I put it in that way because, first, I do not know the exact figure, and secondly it is very difficult to obtain the exact figure. As Members will know, I believe that PFI contracts should be included in the national debt, and I think that there is consensus on the fact that our accumulated national debt was in the low 40s as a percentage of GDP if the Government's PFI liabilities were included. If we double a percentage in the low 40s, we reach 80 per cent.
	Again, in round terms—I speak from memory, and I stand to be corrected—the accumulated national debts of both France and Germany were around 60 per cent. of GDP. It is more difficult for me to get a handle on the accumulated national debt of the United States, because it has 51 jurisdictions with tax-raising powers—50 states and one federal Government in the district of Columbia—but I estimate it at 60 per cent.-plus. There are many different ways of calculating the amount: it will depend on whether local government borrowing is included, for instance.
	The percentage in my beloved Canada was far lower, although that, too, is slightly difficult to get a handle on, because Canada has about 13 tax jurisdictions. The low figure is due to a liberal Government, not a conservative Government. They are engaging in deficit financing and fiscal expansion, albeit from a much better position in terms of accumulated national debt. The percentage in Japan was far higher. Someone may know the exact figure, but I believe it to have been about 90 per cent., if not more. It may even have been more than 100 per cent.
	So where is our country going to be in five years' time if the Chancellor's figures pan out? I appreciate that that is a big "if"; people have said that, and I agree with them. We are trying to look five years down the road and no one has a crystal ball, because if they did they would make a fortune at the race track—and I do not think the Chancellor of the Exchequer has done that. We expect to have about 80 per cent. of GDP in accumulated national debt. That is a big burden, but its order of magnitude is lower than the likely figures for all our G7 competitors except Canada. In comparative terms, therefore, I am somewhat less concerned than I might otherwise be about the accumulated national debt.

Andrew Tyrie: The hon. Member for Wolverhampton, South-West (Rob Marris) made a very thoughtful speech, even if I did not agree with all, or indeed, much of it. The answer to the central point that he makes is that very high levels of deficit and, indeed, very high levels of public spending, are probably unsustainable in the long run. There is no way of getting around that, and those things have had to be addressed. That is the central issue that we are debating today.
	Everyone is agreed that the country is in a huge financial and fiscal mess. The question is whether Labour should be entrusted to clean it up after the next election or whether the Conservatives will be. That is really what the Budget and the Finance Bill are all about, and they will be judged on that basis. The Chief Secretary to the Treasury, who is no longer in her place, suggested that no policy but the Government's could be followed. Her speech sounded more like that of an Opposition spokesman than that of a senior Minister; it was, as one Member put it, something of a rant. However, I shall briefly respond, in general terms, to some of the sense of her points about how the Conservatives should, as I hope they would, address the key issue: public expenditure control.
	My view, which I am confident is that of my party, is that we have to bring public expenditure back under control if Britain is to avoid relegation to second or third division status as a country. The reasons for that are obvious: we cannot hope to be a leading economy while we are saddled with such huge public debt and the cost of servicing it. While our deficit is so large we are vulnerable to the markets, which may demand a premium to service that debt. The relationship between the debt and the very large deficit is crucial. We cannot remain globally competitive with such high taxes and spending as a proportion of gross domestic product in the long run.
	Restraining public expenditure will be tough—some are already suggesting that it is too difficult—but is has to be done, and it can and has been done. In the 1980s, I worked for more than four years on public expenditure control and saw how it was done. It will mean the same things this time as we had last time: a very tight envelope set by the Cabinet at the beginning of a spending round; a return to Star Chambers and, probably, to annual rounds; and a change in the mindset of Whitehall, which has been encouraged to abandon a valuable and difficult-to-construct culture of thrift—sadly, that went with the attempt just a few years ago to get Departments to spend money and to castigate Departments that ended up failing to get rid of their annual quota.
	Getting public expenditure under control will also require an enormous amount of determination and will from both the Prime Minister and the Chancellor—whoever wins the next election. Are the Conservative leadership up to it? I believe that they are, and there is some evidence to support my view. First, last November, when the fashionable mantra, followed by the Government, was for a further large fiscal boost on top of the automatic stabilisers, the Leader of the Opposition stood out against it. He said what we all know in our hearts: that we cannot carry on racking up debts indefinitely. It was a courageous economic and political judgment that he made, and it looks now as if he will be proved right. I do not rule out in all circumstances the need for a fiscal stimulus, in addition to the stabilisers that are already working, but the right circumstances are not in place at the moment and the G20 was right to thwart the Prime Minister's attempt to obtain one at this time.
	A second sign of courage from the Leader of the Opposition has been his decision to tell the electorate what public expenditure control really means—that is something that the Government have failed to do. He has described it as nothing less than a period of austerity. We did not hear any of that from the Treasury today. When the forces demanding more spending appear so remorseless, that takes considerable guts. We will do that—indeed, we are already doing so—because it is the right thing to do. It is the start of a crucial period in which the electorate will adapt to a more trustworthy and direct style of politics, and to the reality that public expenditure control will not be easy.

Andrew Tyrie: I do not intend to linger on the Conservatives' plans, not least because of earlier exchanges with the occupant of the Chair, but we have committed ourselves to all that we can reasonably do at this stage—a year out from the election—in explaining what we will do. We have said that we will get rid of ID cards and abandon big IT projects such as the NHS IT scheme. As the hon. Gentleman has just pointed out, we will also look at quango salaries, the Government advertising budget, the consultancy budgets and many other things. I could go on, but I shall not do so.
	The test that the electorate will apply in gauging the relative merits of the two policies on offer is who they can have confidence in when it comes to getting the deficit under control and getting the debt down. I have argued that the Conservatives have been much more straightforward about that, even in opposition, than the Government. I have said that the Conservative leadership is up to the challenge and has been frank about it. Are the Labour Government up to it?
	I have listened to the Prime Minister speak about the economy for many years. He considers himself to be an economist, and he is certainly an intelligent man, but I have worried for a long time that some of his remarks on the economy suggest that he is a little detached from reality. That detachment began early and was well entrenched before he came out with his famous recent slip that he was saving the world.
	When the Prime Minister was Chancellor, and shortly after Labour's second landslide victory of 2001, he wrote a foreword to a book published by the Treasury and edited by his then loyal lieutenant—I am not sure whether he is still loyal—the right hon. Member for Normanton (Ed Balls). In that foreword, the then Chancellor wrote:
	"In 1997, as in 1944, a new paradigm was required."
	The House will recall that 1944 was the year of perhaps the grandest of all grand economic projects with the creation of what became known as the Bretton Woods project for the complete reconstruction of international economic activity. The Prime Minister, then Chancellor, was saying in effect that he was the man for the hour—he was John Maynard Keynes, Harry Dexter White, FDR and Churchill rolled into one. In the same way as the allied powers set out to prepare the Bretton Woods system, so he had set out in 1997 to reconstruct the global economic architecture. There is no little hubris involved in such a remark. It was not even a flip remark, but one carefully crafted for the foreword to a book published by his Department.
	The book gets much more interesting and becomes very pertinent to this debate and to the boom and bust that has led to this crisis. In the same foreword, the Prime Minister went on to say that we need
	"far more effective mechanisms for crisis prevention"
	and that we need to pay
	"far greater attention to financial stability".
	If only he had done so.
	The introduction to the book—

Stewart Hosie: That is absolutely right, but even on a more vulgar analysis, a 1 per cent. shortfall in growth probably equates to close to £15 billion in GDP, about 40 per cent. of which would be tax. The revenue yield could be massively down, on even a vulgar analysis of those figures.
	The Government are suggesting that the recession will end this year. Notwithstanding the fact that only a few weeks ago, at the time of the Budget, the OECD and Ernst and Young said that there would still be negative growth in 2010, the Government, all of whose major forecasts have been smashed over the past 12 months, are still labouring under the pretence that growth will be 1.25 per cent. next year and 3.5 per cent. the year after that, which I find extraordinary.
	Since the OECD and the Ernst and Young forecasts, we have had the European Commission publication this week. It has downgraded its UK forecasts again to minus 3.8 per cent. this year, and a return to growth late in 2010, not by the 1.25 per cent. forecast by the Government, but by 0.1 per cent., if I have read the reports correctly. That would indicate a very long recovery—a shaky recovery. It will not be smooth or steep. It will be long and difficult, yet none of the plans in the Bill seem to take cognisance of any expert opinion at all.
	We know that the backdrop to the Bill is the massive rise in unemployment, which is important for our constituents. In February, a record month, 138,000 people were added to the register, and 177,000 in a quarter. That is, in effect, 2,000 people a day added to the unemployment register under Labour in this recession, in the past three months for which figures have been published.
	Although there were measures in the Budget speech which may help to create jobs in the future, not least the Chancellor's support for carbon capture and storage, there is not one word in the Finance Bill about carbon capture and storage or carbon sequestration, because, as with so many things, decisions will be taken in the future and implementation will take place years into the future.
	The Bill does contain almost 20 retrospective measures, however. I do not intend to go through them today, because there will be time enough for that later, but all of them will have to be probed thoroughly. Some efforts to tackle tax evasion and avoidance may be necessary and welcome, but I am always sceptical on a point of principle about retrospective measures, and they will have to be examined very carefully, indeed.
	The Bill also contains confirmation of the further rise in fuel duty, and it is interesting that the national policy chairman of the Federation of Small Businesses describes it in this way:
	"Small businesses are the engine room of the economy, but they have been choked by the Budget with increases in fuel and alcohol duty incurring extra costs and little to help small firms struggling with cashflow."
	It is instructive that the FSB describes the Budget increases as choking. It is quite extraordinary that the fuel duty increases are viewed that way, even at this time.

Stewart Hosie: I am not sure that taking more money out of people's pockets would be particularly sensible at this point.
	The point about the cuts is that the Government rightly backed fiscal stimulus. Our view is that the recession was so deep that monetary policy was not enough.
	We back the fiscal stimulus, in principle, although there are issues about the VAT cut. We have seen the Prime Minister strut the world stage talking about fiscal stimulus, not least with President Obama at the ExCel centre. However, the state of Maryland, population 5 million, will have £2 billion extra in fiscal stimulus to spend in 2010, while in Australia the state of Victoria will have 8 billion Australian dollars over the same period. It seems extraordinary that even following their own rhetoric, this Government are prepared to cut public expenditure, in the teeth of a recession, when all the serious commentators say that we will still be in negative growth next year.

Robert Syms: It is a very sad thing; 20 or 30 years ago our tax rates were so high that people spent an awful lot of time trying to avoid paying tax rather than running their businesses. If we are not careful, we will return to people finding sophisticated ways of avoiding tax. That will mean a more draconian tax system and people will not focus on getting a fair reward and on running businesses efficiently. As we have heard, including national insurance the highest tax rate is 61 per cent., which is very high. What is the point of that if the revenue will not be collected, other than to make a debating point?
	Given that we are probably not talking about a vast section of the electorate, it has surprised me how many ordinary people who have no hope of paying that level of tax have taken exception to the fact that the Government have broken a key promise. It says something about us as a nation if we start to mess about with high tax rates and change the overwhelming philosophy that has been in place for the past 20-odd years.
	I am not as pessimistic as some, but there will be some tough decisions to make. I know that my party is not saying very much at the moment about higher rates of tax, but I think that we would like to reduce them, subject to the books. A clear indication from an incoming Government of where they are going on this issue may well determine how much tax is raised, because otherwise we will lose people. The Sir Michael Caine point is relevant, because there are people who are mobile and can use various ways of leaving the country, which will reduce the overall amount raised.
	As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) said, half of all the tax-raising measures in this Budget affect people earning more than £19,000 a year. As a nation, we collect quite a lot of tax at the lower end of the various bands. We tax at too low a rate and then try to make up for it by giving tax credits. It would be better if we got out of the tax credits system and upped the basic rate so that people's personal finances were in a much better shape.

Peter Luff: May I begin with an apology, Madam Deputy Speaker? I missed some of the speeches that followed the opening of the debate, but I am afraid that I was receiving the award of an Industry and Parliament Trust fellowship— [ Interruption. ] I am grateful for the approbation of the House, and I commend the organisation heartily. I should add that my fellowship was largely with the Royal Bank of Scotland, although I am not sure whether that amounts to a declaration of interest.
	I am a veteran of many Finance Bills, both as Back-Bench Lobby fodder during the previous Conservative Government and as a Whip in opposition. I have been trying to work out what it is that I do not like about this Bill, and I suppose it is that it is nakedly and lamentably political rather than economic in its objectives. That causes me considerable concern, but there may be some poetic justice about it. An old saying in politics has it that a Budget that is well received on the day it is announced will prove to be badly received thereafter, and one that is badly received on the day will be well received thereafter. This Budget breaks that rule spectacularly—it was pretty badly received on the day it was announced, and it has unwound with spectacular speed every day since. It has got steadily more unpopular and discredited with every day that passes, so in that way at least the Chancellor of the Exchequer has rewritten the history books, and that is something.
	What will this year's Budget, and the Finance Bill that flows from it, be remembered for? I have decided that it will be remembered for its four Ds—distraction, deceit, delay and deficit.
	I associate "distraction" with the Bill because I am afraid that that is all that I consider the 50 per cent. tax rise and the other changes for higher income earners to be. The proposal is a bit of naked red meat thrown to Labour Members on the Back Benches behind the Chancellor but, even on their own figures, it will make a pathetically small contribution to the scale of the debt and the other problems facing the Government. Other commentators outside the Conservative party, such as the Institute for Fiscal Studies, suggest that the net revenue might be pretty close to zero. I shall return to that later.
	The second word of the four—deceit—flows from the distraction I have described. The Budget of a couple of weeks ago suggested that the bill for the problems facing the country would be paid for largely by the rich, but it will be paid for by every man, woman and child in the country, through increased taxation—miraculously, higher national insurance contributions are to be delayed until well into the next Parliament—and through the burden of debt that will be repaid by our children for heaven knows how many decades to come. That was profoundly deceitful, and a matter of considerable regret, but I do not think that the British people have fallen for it; they know better than that. This is what happens when people play politics with important matters.
	The third D stands for delay. The difficult choices will be delayed until 2011: a funny old year, safely after the next general election. The real pain will not be felt this side of the ballot box, but, again, I think that people know that is going on. If we look at the net figures, including the measures in Budget 2009 and the other measures announced in Budget 2008, we see a net outflow from the Exchequer of £21.26 billion in the financial year that has just begun, a net inflow of plus £4.6 billion in 2010 and, miraculously, a net inflow of plus £12 billion in 2011. The real pain is being delayed for reasons of political expediency. The deficit should be addressed now, not in two years' time.
	That deficit is the underlying concern. It remains unaddressed, and it is out of control. I am struck by yesterday's report from the National Institute for Economic and Social Research. I shall quote from the report on it in  The Daily Telegraph, as I have not seen the NIESR report. It states that the NIESR believes
	"it would be all but impossible for the Government to return Britain's total public debt to 40 per cent. of gross domestic product, currently equivalent to £600 billion, until 2023".
	Terrifyingly, the NIESR also provides the shape of what future Budgets and Finance Bills might have to be, and offers three basic options to solve the problem:
	"The first was to raise the state pension age, from 60 for women and 65 for men, to 70 between 2013 and 2023."
	I have been doing the calculations, and I reckon that that would catch me nicely. I shall be 60 in 2015, and 68 in 2023, so it looks like retirement at 70 for me—and for many of us in the House. That illustrates the scale of the problem.
	The second option was to raise the basic rate of income tax by 15p in the pound. I accept that these proposals offer a single-club solution, but they give an idea of the scale of the problem.
	The final option was to cut Government spending by a tenth, which would be a very serious step indeed.
	I am a Select Committee Chairman, which I enjoy, and I know that Select Committees choose their words with great caution. I was struck by the Treasury Committee's summary for this debate. It was prepared in a great hurry, and we owe the Committee a debt of gratitude for the speed with which it came to its conclusions. Its summary states:
	"Whilst it is possible that the Government will meet its growth forecasts, on the available evidence this is an optimistic assumption."
	Those are calm, measured words, but they frighten me. I think that the growth forecasts are optimistic, and that they are there to make the debt burden look less frightening. I think that they will prove to be optimistic, and that the debt burden will be much higher than the Government are currently saying.

Peter Luff: I will not be led into debating the merits or otherwise of devolution; I am not going to do the SNP's dirty work for it. I will let what the hon. Gentleman has said speak for itself.
	The Treasury Committee's summary also contained these calm, measured words:
	"We note that the Chancellor's forecasts for public borrowing and national debt represent the worst fiscal outlook since the Second World War".
	That represents a very long period. Crucially, it goes on to discuss a point raised by a number of my hon. Friends, stating:
	"The credibility of any attempt to restore the public finances will depend on an acceptance that the structural deficit must be addressed as well as the consequences of the current extraordinary circumstances."
	It is the very large underlying structural deficit that gives me such cause for concern for future Finance Bills and Budgets.
	In his last Budget statement as Chancellor, the present Prime Minister predicted public sector net borrowing of about 2 per cent. of GDP for the year we have just entered. This year's Budget revises that figure to about 12 per cent. What a dramatic change! The Chancellor forecast that the UK economy would shrink by 3.5 per cent. this year—I have already alluded to that figure—and that it would grow by 1.25 per cent. next year. The International Monetary Fund says that the figures will be 4.1 per cent. this year and a shrinkage of 0.4 per cent. next year. Even the Government's own figures undermine their Budget forecasts. Within two days, the Office for National Statistics had revealed a still larger reduction in economic activity for the first quarter of 2009.
	On the most optimistic assumption, public debt is going to rise to 80 per cent. of GDP within four years. That terrifying figure is twice as high as what we thought was a sustainable level of public borrowing and public debt. In this year's Budget, public net debt was expected to be 39 per cent. of GDP this year but it is now put at 59 per cent., increasing to 79 per cent. by 2013-14. I know that that outcome puts Britain only in the middle of the advanced economies in terms of the percentage debt to GDP ratio—an argument often used by the Government.  [Interruption.] I will happily repeat it, as I have an unfortunate habit of speaking too fast. As I have already said, I know that this outcome would put Britain only in the middle of the advanced economies in terms of the percentage debt to GDP ratio, but the tragedy is that if we had not had the spending splurge of the last six, seven or eight years, we could have been in a much stronger position.
	To employ the phrase of my hon. Friend the shadow Chancellor, if we had indeed fixed the roof when the sun was shining, we could now be in a uniquely strong position to take the world by storm, yet the spending splurge of the last five, six or seven years enfeebled our position. We could and should have been so strong; this Finance Bill should not have had to face the challenges it seeks to address. We have crippled a golden opportunity. This Government like to take credit for paying off a bit of the national debt: they paid it off when they stuck to Conservative spending plans and it all went wrong when they started following their own.

Peter Luff: In a rather nice yellow envelope, as I recall, for the birthday card. My godson wrote to me saying "Thank you so much. I am saving up for an iPod." I thought "What a strange phrase." I realised that I had not heard the phrase "saving up" for an extremely long time—certainly from the lips of the current Government. But it is a phrase that we should use rather more as a nation. I commend my godson's wisdom in saving up. I must give him more money to save up for future Christmases and birthdays.
	I do not believe that this Finance Bill encourages saving up. That is one of the many things that are wrong with it. Hints were dropped that it might provide such encouragement, but that has not happened. Nevertheless, there are good things in the Bill. I do not want to damn the whole Bill; that would be quite wrong of me. There are clearly good things in the Budget as well. It is a curate's egg with more bad bits than good bits, but there are good bits. For example, I am delighted that, after much agonising, the trade credit insurance scheme is up and running.
	It is one of the characteristics of the Government's support both in Finance Bills and in the measures announced in Budgets that they produce a great fanfare at an early stage and then take a very long time to introduce their measures, which subsequently help many fewer people than were expected to benefit. The trade credit insurance scheme should have been introduced earlier, but it is there now, and I will not look a gift horse in the mouth—although we are yet to see how effective it proves to be.
	One of the very good things in the Budget is the capital allowances arrangement. I know that the small business community is very pleased that capital allowances for firms that invest more than £50,000 will double to 40 per cent. That is quite an expensive measure—I believe that it is worth £1.64 billion this year—so well done: that is a good thing in the Budget. The Federation of Small Businesses is particularly grateful for the opportunity to defer tax bills, with loss-making companies able to reclaim tax on profits made in the last three years.
	There are good measures in the Bill, therefore, but some measures that I hoped would be included are missing. National non-domestic rates—business rates, as they are colloquially called—are a crucial issue. The Chancellor made a big concession before the Budget in terms of the increase due next year; it is to be phased in, which is very welcome. I hoped that the Budget would address the void rates issue, but it does not do so. I know of people in my constituency who put together a small property portfolio as a pension scheme for their old age. One of them has had to go bankrupt because every property in his portfolio is now empty. The portfolio was supposed to bring in a revenue stream in his old age; instead, it has just brought in void rates bills. Money was supposed to be coming in, but the properties ended up costing him money. As a result, he has gone into personal bankruptcy. The Government should also be taking a much more careful look at the implications of void rates, particularly for retail businesses, but also for manufacturing businesses.
	There is one measure that I particularly hoped would be in the Bill. It is only a small measure, but I attach some importance to it as I introduced a private Member's Bill on the subject: automatic rate relief for small businesses. A few years ago, the Government wisely introduced a small business scheme; it is fairly complicated, but the essence is that small businesses put in an application and then get back half their rates. About a month ago, I was persuaded by a very persuasive Minister to withdraw my Bill because it was very likely that the Budget would contain a similar measure. I was building up to making an attack on the Government—perhaps a rather disconsolate and aggressive one—about their failure to keep their promises, but in fact it is not entirely clear to me that they have finally decided not to keep their promise to me; we still have some measure of hope. Let me explain why I am so sad that this measure is not in the Finance Bill. For small businesses in particular, the odd £100, £500 or £1,000 can make a huge difference to the prospects for survival. We sometimes forget that. For micro-businesses, which I hope will be the macro-businesses of the future, small sums matter.
	I have received a number of words of encouragement from the Government in recent days. Although this measure is not in the Bill, as I hoped it would be, the Chancellor has kindly written to me. The letter is dated 27 April, and it says:
	"I can confirm that the Government is keen to continue to improve the administration of small business rates relief to make it easy to claim and increase its take up. I have therefore asked my officials to work with CLG officials to see what can be done to improve the take up of the scheme and to report back to me."
	What the Chancellor does not say in that letter, but which I happen to know is the case, is that the Department for Business, Enterprise and Regulatory Reform is also closely involved, in the noble and impressive persona of Baroness Vadera. When she gets her teeth into a matter, she tends to make sure that things get done, so I am optimistic. I am not suggesting that the two very able and charming Ministers sitting on the Government Front Bench at present do not get things done, of course, but the baroness has a certain reputation in Government for outcomes. I was therefore particularly encouraged by a parliamentary answer I received very recently from the Minister for Local Government, who said:
	"The Department for Communities and Local Government has had a number of discussions with the Department for Business Enterprise and Regulatory Reform and Treasury on making small business rate relief automatic.
	The Government are keen to explore ways in which we can promote, and improve the administration of, the existing small business rate relief scheme and increase its take up, including through automatic options. CLG officials will work with Treasury officials to see how the take up of the scheme can be improved."—[ Official Report, 5 May 2009; Vol. 492, c. 140W.]
	That goes a little further than the Chancellor's letter, and I am extremely encouraged by that.
	I understand some of the Treasury's objections, but I believe that I have answers to all them, and I also believe that automaticity, to use a rather ugly word, would be welcome throughout the small business community and the local government world, and would have nothing but positive consequences for this Government and the economic activity of the UK. I therefore hope that, although this measure is not in the Bill as I had hoped, we might hear more about it later.
	I have talked sufficiently about the problems of debt and delay in the Budget, but may I emphasise one point? The Government say they are taxing the rich and that that is only fair. Well, we can discuss what rate of taxation on the rich is fair, but it is very important to remember that, on the Government's own figures, less than half of the £5 billion tax rises announced in the Budget are actually taxes on the rich; the majority of them are on the rest of us. Most of the tax rises that the Government are planning are on average earners; they include tax rises such as those on fuel and alcohol and, crucially, the increase in national insurance contributions announced in the pre-Budget report. The sad thing about the PBR is that the Government have got out of the habit of having debates on it. The PBR has become a surrogate Budget and contains Finance Bill-type measures. We had no debate on the increase in national insurance contributions announced in the PBR last year. There was a statement and Members could make one quick comment afterwards, but there was no debate, I believe for the second or third year running. I say to Ministers that if there is to be at least one more PBR before the election, I hope that this time we will have a debate on it, because the PBR contains important measures that should and could be scrutinised at the time.
	We also know that this Budget and Finance Bill enables reductions in capital spending—again, they will take place after the election—including a very large reduction in the capital budget of the health service. I find that interesting coming from a Government who have criticised the Conservatives for wishing to cut expenditure on sensitive areas of public services.
	I am particularly disappointed by the Bill's complete lack of activity on savings policy. It contains a rather complicated provision on individual savings accounts and something that I benefit from as someone who is now over 50, but it really is miniscule, footling stuff. Savers have been hit very hard by the consequences of the events of the past year or so; there have been very low interest rates and very low dividends. Of course, many savers are pensioners, who do not want to have to rely on pension credit for their welfare, well-being and survival; they want to have the dignity of relying on their own incomes. Thus, it would have been good to see the Government doing more, as they suggested they would, to help savers in this Budget. I wish to discuss the VAT scheme in a moment, but I should say that helping savers is one very good example of a way in which that £12.5 billion could have been better spent. We can discuss whether it was right to have a fiscal stimulus, but that was the wrong fiscal stimulus, and the money would have been better spent helping pensioners and savers.
	I do not think that, technically, the enterprise finance guarantee scheme is covered by the Finance Bill, so I shall simply say that I am looking forward to my Committee's study of the scheme—I believe that we are taking evidence from the banks on 2 June—and gently remind the Financial Secretary that I am waiting for an answer to a question that I asked in February. I have just tabled a reminder parliamentary question today, although I am sure that the lack of a reply was an oversight and was not deliberate, and I look forward to getting an answer about the take-up of the scheme. There are still issues relating to credit in the overall economy that this Bill could have perhaps done more to address.
	Let us briefly consider the VAT reduction. I am clear about the fact that I would not have done it. Leaving to one side the argument about whether to have the fiscal stimulus, this was a bad way to spend £12.5 billion. There are big questions about the timing of the ending of the VAT reduction—in the middle of the week during the sales period just after Christmas is a ridiculous time to end it. I pressed the Chief Secretary on this point at the beginning of the debate, but I regret to say that she was not flexible. I was chastised by the hon. Member for Edmonton (Mr. Love) for being hypocritical in some way—I am sure that he did not use that word, because it would be unparliamentary for him to do so, but he said something of that kind. What I am saying is that it would have been much better if the VAT reduction money had been spent in other ways and that I would end the reduction much sooner and use the money saved in other ways. Realistically, the Government are not going to do that, for reasons of realpolitik, so I point out that if they were to give the reduction another three or four weeks—the other alternative—that would help the retail industry considerably. As I say, I would end the reduction now and spend the money differently.
	My Committee heard evidence from the small business community about the great cost that the VAT reduction has imposed on it. The reduction has been a problem for small businesses, which have had to invest in new software packages and will have to do so again at the end of the year, when the rate goes back up again. The reduction has not benefited small businesses—quite the opposite; it has been a problem. Many big retailers have also encountered problems with it. I am not talking about the Tescos of this world, which have computerised systems and can adapt easily. Such businesses are not the kind of businesses that need help from a VAT reduction; although such businesses are expanding rapidly into other markets, a large proportion of their products are still VAT exempt. It is not the Tescos of this world that we need to help, but the smaller businesses, and they have not been helped by the VAT reduction.
	I would have spent the money on helping savers; on cutting corporate tax for small businesses, as my party suggests; on cutting payroll taxes for small companies—of course, this Government are planning to increase those taxes—on deferring small business VAT bills in a more comprehensive way than the Government have suggested; or on funding prompt payment by local authorities. The Government have a 10-day target on that, and I believe that my local authorities are meeting it. I am pleased about that, and I congratulate Worcestershire county council and Wychavon district council on what they are doing. I do not know what assessment the Government have made of the effectiveness of the target, but it is an expensive thing. I would also have spent the money to pay for the relaxation of void business rates, which should have been included in this Bill. I also might have used it to provide some sort of employment subsidy. I was very struck by the argument by a former Minister, Lord Digby Jones, that we should help when businesses, especially those with highly skilled workers, face a short-term drop in demand—such as in manufacturing businesses in the west midlands in the automotive sector—so that those workers are not lost to other less skilled jobs. With an employment subsidy, those businesses could keep the staff on. Baroness Thatcher's Government did that, so I would have thought that this Government could do so.
	I mentioned the 50 per cent. tax increase. It is a political device, used as a political dividing line by the Prime Minister and Chancellor. We are rightly not committing to repealing it as an early priority, because our first priority must be the taxes on everyone—the ordinary, hard-working families—such as the national insurance contribution tax hike that is coming in 2011. That is the right policy. We have said that the 50 per cent. tax must take its place in the queue of tax reductions that we would like to make as a future Conservative Government, but that does not mean that we cannot damn that tax increase for the extraordinary damage that it is doing. The Government just do not understand the impact that it will have on the international community and mobile entrepreneurs.
	A fascinating article, "Wringing the Rich", in  The Sunday Times this week described that damage clearly. It said:
	"The worry is not so much the impact of the tax itself, but the signal it sends out. Entrepreneurs are not welcome anymore".
	Whether the Government like it or not, that is how it sounds to business. The Government may not even have meant that—in fact, they meant it as a political device in UK politics—but that is its impact. Miles Templeman of the Institute of Directors has said:
	"The increase will have a damaging impact on the wider economy and undermine the UK's attractiveness as a place to invest."
	Chris Sanger, UK head of tax policy at Ernst & Young, has said:
	"The key risk here is that such extreme rates will deter entrepreneurs and the most successful wealth creators from coming to the UK and encourage those here to leave."
	Those are people we cannot afford to lose. If there is one provision in this Bill that is offensive, wrong-headed and ill-judged it is the package of the 50 per cent. tax rate and the changes to pension contributions and thresholds. It will create a bizarre range of marginal rates on higher rate taxpayers that could and should have been avoided—and it will probably not even raise any money.
	This was an entirely foreseeable recession. Only the scale might perhaps have surprised us. This Bill does many of the wrong things to address the problems that the recession has created, and does not do many of the right things that it could and should have done. My right hon. Friend the Leader of the Opposition has referred to the new age of austerity. We will hear a lot more of that in the next year or so, because it is what we now face as a result of the mistakes by this Government—not the problems created by the US sub-prime markets. The Government are not being straight with voters about how they will sort out the problem, but the voters have seen through that. The voters have worked out that if they do not have to pay for it until 2011, there is probably a catch. They are not to be taken for fools.
	I said that the Bill was characterised by four Ds—distraction, by using the rich as an alternative target; deceit, by pretending that ordinary people will not have to pay the tax bill for this Government's failures; delay, by putting hard choices off until after the election; and a deficit that is out of control. I shall conclude with three further Ds—this is a dishonest Budget from a discredited Government facing defeat, to which the Budget and this Bill will contribute mightily.

Andrew Love: If the hon. Gentleman will be kind enough to give me a few seconds to develop my argument, I will come to that point.
	The Budget projection for 2010 of 1¼ per cent. growth was widely ridiculed in the media and compared with the IMF projection of, I believe, negative 0.3 or 0.4 per cent.; according to the IMF, we will still be in recession. If we take the average of all recent forecasts, growth does return to the economy; it is something like 0.3 or 0.4 per cent, which is a good deal closer to what the Treasury is suggesting, although of course still significantly less. That is one reason why the epithet "optimistic" has been used, which was very much at the centre of our debate in the Treasury Committee.
	If we then project forward a further year—I would hesitate to take with any great accuracy a projection made that far into the future—the average of forecasts is roughly 2¼ to 2½ per cent. growth. As the Budget figures suggest, the Treasury selects 3½ per cent. I would raise questions about how accurate any such forecasts could be, but let me say why I think that, although the Treasury is veering towards the optimistic side, it may not be an unreasonable forecast.
	The first reason is that in previous recessions, such as those of the early '80s or the early '90s, when the recession bottomed out there was spare capacity in the economy, which made it possible for recovery to occur relatively quickly and at an above-trend growth rate. The Treasury has therefore assumed that we will have a relatively faster bounce-back from the end of the recession. Secondly, we have an extraordinary stimulus in the economy—not just the automatic stabilisers, not just the activities of the Bank of England, but a significant depreciation in the value of sterling, which should open opportunities to re-phase our economy to export more into the future.
	Perhaps the most important reason, and the one that is being challenged in alternative forecasts, is the assumption in the Budget that agreements made at the G20—international action to stimulate economies across the world—will be honoured. I do not know whether that will happen, but I think it is reasonable to assume that other economies will take similar action. They have all announced that they will, and therefore one can assume that, although those Budget projections are on the optimistic side, they are based on fairly good economic analysis.
	I shall now discuss the ONS announcement of a contraction of 1.9 per cent. in GDP in the first quarter. The hon. Member for Ludlow (Mr. Dunne), who I know takes a great interest in these matters, will know that those figures were very much initial figures, based on only 50 per cent. of the evidence that will become available. When we asked the Treasury's economic guru about those figures, he said not only that he expected them to change going forward, as they often do, but that he saw no reason to re-evaluate the projections for this year, and I would accept that at this stage we should not do that.
	Therefore, my first point—I have laboured the point because of all the press and other comment that there has been—is that, in my view and I think in that of most independent forecasters and economic commentators, the Budget projections are within the realms of possibility. The idea that they should all be entirely rubbished really must be challenged, and that is what I have sought to do.
	Let me come on to the public finances. It is amazing that everyone on the Opposition Benches who has commented today has cast into doubt whether we have an honest appraisal of the problem that we will face with our public finances. This Budget is honest about that. Opposition Members have quoted the figures. When you tell us how terrible the situation is, you do not use alternative figures; you use the Budget figures to do so.

Andrew Love: In the next few months, when the Opposition have had a chance to look carefully at all the implications of the Red Book and come forward with a series of proposals, people will take them and the criticisms that they make more seriously.
	One of the issues raised by my right hon. Friend the Member for Birkenhead has been reflected in comments from the hon. Member for Twickenham (Dr. Cable) and has found favour in some parts of the Opposition. I refer to the question of whether action should be taken on public sector pensions and, by implication, on public sector pay. My suspicion is that nothing concrete will be forthcoming from either of the major Opposition parties, because they will not want that to be part of any election campaign that may come this year or next.
	Comments were made earlier about how we fund the deficit. As I mentioned in an intervention, a number of members of the Treasury Committee visited the Debt Management Office today. From what we saw and from the discussion that we had with the senior officials there, it was clear that for various reasons there is an appetite out there in the marketplace for Government debt. Whether that is because there is a flight to safety in risk-free products such as gilts, or because of the need of the pension industry for long-dated gilts, there does not seem to be a single serious forecaster or economic commentator who suggests that although the demands of the Debt Management Office to raise money on behalf of the Government are substantial, there is not a willingness out there in the marketplace to deliver that.
	Finally in relation to the public finances, we have heard repeatedly from the Opposition that we are building up a 79 or 80 per cent. ratio of debt to GDP. As the hon. Member for Mid-Worcestershire commented, that places us somewhere in the middle of international comparisons. Although that should be taken extremely seriously, we are not some outlier, as has been suggested by some Opposition parties. We are around the average of economies that could be considered both our competitors and our comparators.

Andrew Love: I acknowledge the hon. Gentleman's consistency, because that theme runs through his period as a Treasury Committee member and his questions on the Floor of the House. However, his argument is accepted neither by the Government nor, I suspect, by most independent economists, and I return to my earlier point that the Budget is honest in its presentation of our public expenditure problems.
	I must move on, because I want to comment briefly on several specifics of the Budget. I cannot understand why people find the 50p tax rate so difficult to accept. It seems entirely reasonable and fair that those who have benefited most from the good times make some contribution during the difficulties that we now experience. As I understand it, that view is shared by the public, and the 50p tax rate reflects it. However, I, like others, have some concerns about the proposal in the Budget and, most of all, about the uncertainty surrounding the yield from the tax.
	We were told on the Treasury Committee that only 31 to 32 per cent. of the potential yield will probably be realised. The Government have taken some steps, as was mentioned earlier, to do something about income being moved into pension schemes, and I recognise that that will increase the likely yield of the 50p rate. However, as the hon. Member for Twickenham (Dr. Cable) has said extensively, there are still major opportunities for people to shift income into capital to reduce their tax burden, so one suspects and hopes that the Government will return to those measures to ensure that the people who can afford it, and who have done so well in the past, make a sensible contribution.

Andrew Love: I certainly share the concerns about increased complexity and, albeit in a different way, the likely yield of the change in taxation. However, I hope that, at the pre-Budget report later this year or, if there is another Budget, at the next Budget before the general election, the Government will consider carefully whether the 50p tax rate has raised the amounts that we would wish to see.
	I shall make two other brief points before I finish. I was surprised that the hon. Member for Mid-Worcestershire (Peter Luff), the Chairman of the Select Committee on Business, Enterprise and Regulatory Reform, did not mention the vehicle scrappage scheme.

Peter Luff: Technically, the scheme is not in the Finance Bill, so that is why I did not raise it. however, I am very interested to hear what the hon. Gentleman has to say about it.

Andrew Love: I welcome the scheme, because there is a great feeling outside the House that the Government have done much for the financial sector, but that we have rather forgotten about manufacturing. It was therefore important to lay down a marker, demonstrating that we are helping manufacturing. We could have taken a narrow, nationalistic view, because it is already evident that the schemes that have been introduced in Germany, France and other European countries have benefited the British car industry, 85 per cent. of whose production is exported to Europe.
	However, it was right and proper that we brought forward a scheme. There are some problems of dead-weight costs and there is the issue of whether British manufacturing will benefit. But if we look carefully at the benefit that the scheme will deliver to the retail and component parts of the motor industry, we see that the scheme is well worthy of support.
	My biggest regret about the Budget relates to our commitment to halve child poverty by 2010 and eliminate it by 2020. That faced a setback in the Budget—and, it has to be said, in the pre-Budget report; in neither were there substantial measures to address the issue. I regret that, although one has to accept, realistically, that the financial circumstances have changed significantly. I hope that the Government will not forget about their child poverty commitments, which have great public support. Everyone recognises the need to assist the poorest and most vulnerable in our society. Recognising the legislation and maintaining the commitment will do more good and be presented more positively for the Government than almost any of the measures in the Budget.

Tobias Ellwood: My hon. Friend raises two fundamental issues that will be at the forefront at the next general election, when the nation will judge this Government on what they said in their previous manifestos and what they actually did. Those are two great examples of how they told the nation one thing but did something else.
	Just two hours after the Chancellor sat down, the IMF ridiculed those figures, saying that the growth figure for 2009 would not be minus 3.5 per cent. but minus 4.1 per cent., and that next year it would not be 1.25 per cent. but minus 0.4 per cent. Things are getting much tougher. I wish that the Government would understand and own up to the fact that we are not going to come out of this recession in the optimistic way that they are projecting.
	If that is reflected in anything, it is the astronomical scale of borrowing that we are about to approve: £175 billion this year, £141 billion next year, and £118 billion the year after. Those are figures on a scale that have never been seen in the history of this Parliament. As a result, every child, including those not yet even born, will be burdened with taxation round their neck to the tune of £22,000. If the Government's figures of just six months ago have already been discredited, let us see, six months from now when the Chancellor gets up at the next pre-Budget statement, whether his forecasts were correct. Six months ago, he said that by June this year the recession would be over, so I am curious to see what will happen next year.
	This Bill should be about measures of taxation or otherwise to help us to weather the economic downturn, so what has happened to some of the initiatives that the Government rolled out with such vigour? What has happened to the credit guarantee scheme, the internship scheme, the asset-backed securities scheme, the HomeBuy Direct scheme, or the homeowners mortgage support scheme? Those were all talk—we have had no confirmation that they are working. We hear from our constituents and businesses that the money is not getting through because the banks are not able to lend as the Government promised that they would. The recession is lasting much longer because they are not giving us the leadership that we expect.
	The Government have failed to acknowledge the cuts to public services—they have been glossed over. In health, there is a cut of £2.3 million; in education, there is a total cut of about £1 billion. Today we had an interesting debate in Westminster Hall on funding for further education with the fiasco that is surrounding the Learning and Skills Council and the fact that there is now a shortfall of £2.7 billion.
	The Government have made vague announcements that there will be money, but we know from speaking to our schools that they have not been given as much money as they were promised. The Minister for Schools and Learners, who turned up late to the Westminster Hall debate, eventually made it and acknowledged that letters from the Learning and Skills Council went out without his authority. His office knew about them, but the consequence is that schools in my constituency have been promised less funding than before. They will have more pupils coming through the gates in September, but they do not have the ability to pay for them.

Tobias Ellwood: My hon. Friend makes a very important point. The words "boom and bust" are not mentioned many times by Labour Members. In fact, we no longer hear the language of fiscal rules, golden rules and so forth. It would have meant much to the nation if the Prime Minister had said, "Yes, I apologise for my part in what has happened." Instead, as my hon. Friend points out, blame has been put on the Americans and Fannie Mae and Freddie Mac, and it has been suggested that what happened over there spilled over here. But it was not the Americans who allowed mortgages of 125 per cent. in the UK, and it certainly was not the Americans who, when the Bank of England became independent, handed over responsibility for certain rules to the Financial Services Authority. The FSA then relaxed those rules, allowing banks to lend and get into debt on a scale that we are now beginning to regret.
	I return to my intervention on the Chief Secretary about the cut in VAT from 17.5 per cent. to 15 per cent. I do not want to get into the whys and wherefores, and I have already stressed that it was an unwise move. My concern is about when it returns to 17.5 per cent. at midnight on 31 December. I do not know where Labour Front Benchers spend their new year's eve, but if they spend it indoors they will not be aware of the nightmare that the change will cause as every bar, pub, restaurant and so on across the country has to reconcile things when Big Ben strikes midnight. I plead with Ministers to consider that in Committee and ensure that the change back up to 17.5 per cent. is debated.
	I have suggested Sunday 3 January as a possible date for the change, or 31 January, which would allow the sales to benefit. One consequence of an increase in VAT is a sudden rush to buy things before it goes up. I stress that the reason why the cut was unwise in the first place is that many small and medium-sized businesses, which could have benefited from more support from the Government, were already offering discounts of 10, 15 or 20 per cent., so a 2.5 per cent. drop was neither here nor there.

Tobias Ellwood: My hon. Friend again makes a valid point. To benefit from the temporary change in VAT, people would have to buy products that were so expensive many of them may not even have been made in the UK. That is a lesson that the Government have learnt, so it will be interesting to see what changes to VAT they propose next. I suspect that VAT may not stop at 17.5 per cent. but head a bit further north, considering the signs of the times.
	I would like to talk about how the Bill affects the tourism industry, which is the portfolio that I follow. I make no apologies for raising the issue. Tourism is Britain's fifth biggest industry and it is important to the UK. We are the sixth most visited place in the world. In an economic downturn, tourism is the one industry that is faring well and that could actually make more money. Unfortunately, it is doing well in spite of the Government, rather than because of them. In the lead-up to the Olympics, which is our one chance really to promote British tourism, the tourism budget is being cut, which is a scandal.
	I would like to react on record to the comments made by Michael Savage, who is a DJ and political commentator in the United States. In reaction to being denied entry to this country, he told his audience of 10 million people not to visit the UK. That is an absolute scandal. Let me tell his listeners: ignore the DJ and come to the UK. Enjoy the holiday, enjoy our exchange rate and understand that he is talking out of his backside.
	Tourism is called the hidden giant of the economy—it is the fifth biggest industry, and it seems to be hidden from Parliament as well. For every £1 that we spend abroad, £25 is brought into our economy. I understand that the Minister hosted an event at the Treasury not too long ago, and if I can catch his eye— [ Interruption . ] There we go. I hope that he will acknowledge the importance of tourism and the fact that Governments of all colours could do more.
	I would like to underline several points about taxation in the Bill. The taxation of bingo is dealt with in clause 20. What input did the Department for Culture, Media and Sport have into the change in policy? VAT has gone, for which the industry has been calling for some time, as have we. There was a system of double taxation that was unique to bingo. The industry was hit by gross profits tax and VAT, but when the industry gets what it wants and VAT suddenly disappears, it is hit by an increase in gross profits tax, from 15 to 22 per cent. The Government have given with one hand and taken away with the other.
	The consequence of that is an increase in taxation of about 46 per cent. That may be a cunning way to make money, but the Government do not fully understand the consequences that it will have for our communities. Some 8.5 million people play bingo every year. Many of them are old ladies, and for many the bingo night is their one night out in the week. One third of all bingo companies' locations are now under threat and many are closing every month. If we take bingo away from the community, we deny those people their ability to get out of the house, meet people and do something that they love doing. The consequence of raising money on the one hand is a detrimental impact on the community on the other.

Tobias Ellwood: My hon. Friend puts his finger exactly on the bunker mentality involved in the Treasury introducing tax cuts and changes to our taxation regimes without understanding their impact on our communities. If we change taxation law relating to pubs, of if we change the policy relating to post offices and bingo clubs, we change the fabric of our communities. The Government are failing to recognise that. That is evident not only from the clauses that we are debating today but from the fact that other Departments have either not been consulted about these measures or have not been able to have any input into the Bill.
	In just one year, we have gone from being one of the strongest economies in Europe to one of the weakest. We have been hit by the same global economic storm as everyone else, but Britain has fared so much worse than other countries, thanks to decisions taken by the Prime Minister over the 10 years that he was Chancellor. Most notable was the decision to remove key regulatory powers from the Bank of England when it became independent in 1997 that would have prevented the escalation of debt that allowed British banks to become so over-exposed during the economic downturn.
	Instead of admitting fault, coming to the House and saying, "Yes, we made some mistakes and we are now going to try to solve them", the Prime Minister has tried over and over again to blame the United States. The only time he stopped doing that was, conveniently, during the G20 summit, when we had some guests who would probably have been a little bit upset to hear that old, incorrect argument being used so often. He should come to the Dispatch Box, put his hands up and tell us what his role has been over the past 10 years. Instead, we limp on with a weak and feeble Government and a weak and feeble leader, support for whom is dwindling in the nation and in his own party. We must now wait until the general election when the country can finally be put out of its misery. Until then, we face a wasted year, and a wasted opportunity to move things forward on the scale that Britain expects.
	The Bill was supposed to ignite the engines to restart the economy, but we cannot even see a spark. In reality, the Government are fumbling around with the jump-leads. No initiatives have been put forward that will rebuild Britain's competitiveness, improve its productivity, infrastructure and skills base, or strengthen our society by investing in our employment and welfare system. Of course, it is thanks to a decade of Labour that there is so little in the Bill to match the urgency of the economic challenge we face.
	I hope that this Government, who seem so short of ideas, will not be churlish about accepting amendments in Committee, but I will not hold my breath. If my advice based on the simple idea of changing the date on which VAT returns to its 17.5 per cent. rate is not even going to be considered, I do not hold out much hope that any other Opposition amendments will be accepted. We will await the pre-Budget report in November to see how this Government have fared; perhaps then the Government will put their hands up and acknowledge that we were right and they were wrong.

Philip Dunne: It is a great pleasure to follow that passionate speech by my hon. Friend the Member for Bournemouth, East (Mr. Ellwood). I would like to start my remarks by reflecting a little bit on the comments that he and other hon. Friends have made about the nature of the Chief Secretary's opening speech earlier today. I listened carefully to what she had to say, and I regret to say that I found it entirely characteristic of her approach to the House and her present role.
	The Chief Secretary's speech was focused not really on her own proposals, but on a smokescreen. She sought to conjure up a smokescreen from thin air to camouflage the Government's disastrous conduct of the economy, while at the same time seeking to paint a fantasy picture of Conservative plans. Her speech betrayed the whole approach of this beleaguered Government: "When you are lying at the bottom of a hole that you have dug for yourself, you bear your teeth, start gnashing and try to claw your way out of a dugout." In the way the right hon. Lady conducted herself, she was really the chief terrier of the Treasury rather than its Chief Secretary.

Philip Dunne: That would have been good advice for the Chief Secretary, so perhaps my hon. Friend should have proffered it to her. Perhaps he will be able to do so later in the debate.
	The Chief Secretary's approach belied her political antennae, which were clearly telling her that she should adopt attack as the best form of defence in any form of political debate. Her attack was intrinsically political and focused on attempts to wrongfoot her political opponents rather than to recognise the reality, acknowledge the scale of the problems that our economy has been driven into by the Government and seek to introduce measures to help address them. What the meant for me was the end of aspiration under new Labour. There were no signals that Britain is a competitive place in which to do business, that individuals find Britain an attractive place in which to build their careers or that the Government understand how this economy can compete.
	This Finance Bill exposes the political truth of this Government under the present Prime Minister. We heard calls earlier today for him to reveal his vision for this country. Well, I have seen his vision—in the Budget, in the Finance Bill and in his Chief Secretary's speech. It is not aspirational; it is not new Labour; it tears up the manifesto commitment not to raise income tax; and it tears up the fiscal rules with nothing to replace them. It rips out the heart of new Labour. The vision is bleak: it is for a prolonged period of debt-burdened darkness. It is back to old Labour, lurching rudderless from crisis to crisis as dole queues lengthen.

Philip Dunne: My hon. Friend makes an extremely important point. There is no evidence in what we have heard from Labour Members today or in the Budget debate that there is any longer any real understanding on the Labour Benches of what drives an economy, what makes it work or how much it relies, especially in a trading nation such as ours, on the entrepreneurial spirit. We must encourage business men to come to this country, given the increasingly global environment in which we live. We cannot simply assume that things will happen because we have a talented pool of people who have been educated here. Education is now an international business. Many people from this country can be educated in other countries—increasingly they are doing so in the United States—if that is where they feel that their future lies.

Philip Dunne: I am grateful for that intervention, as it takes me nicely on to the issue of the magnitude of the problem. The NIESR says that there is a real possibility that GDP will fall more this year than in 1931, stating:
	"The pace of decline to date shows a remarkable resemblance to that of the depression of the early 1930s."
	That is bad enough, but if the governing party and those responsible for managing the economy acknowledged that we face such a dire GDP situation and that the scale of the problem in general is so great, we Conservative Members would have some sympathy. As we all know, however, there is very little recognition on the part of the Prime Minister and his Treasury team that we are in such a situation, even though it is evident to all independent commentators that that is the case. It therefore becomes increasingly challenging for the Government to find their way out of this problem.
	The impact of the poor forecasting can be seen in the Red Book estimates and projections for public sector net borrowing as a proportion of GDP. As the hon. Member for Edmonton said, projecting several years ahead is prone to considerable statistical error, but the Red Book makes a stab at it and comes up with a figure of 5.5 per cent. for 2013. That is based on the highly optimistic, rather than realistic, forecasts that the Chancellor set out in his Budget speech. The variance between the 5.5 per cent. cited in the Red Book and what the NIESR says is more than 50 per cent. The NIESR forecasts that public sector net borrowing will be 8.6 per cent. of GDP in 2013-14. There will be a significant shortfall in Government funding should the economy not grow as the Chancellor has forecast. If it does grow as he has forecast, some estimates have identified that there will be a black hole of more than £40 billion—I believe that the figure is £45 billion—in the Government's finances. If the growth is as poor as independent commentators are suggesting and the debt as a proportion of GDP is as I have just indicated it might be, even that figure will be a significant underestimate.
	There is a colossal hole at the heart of this Government's public finances that can be met, in the short term, only through public borrowing. As the right hon. Member for Birkenhead (Mr. Field) bravely said, there is a significant question mark over this Government's ability to fund the debt with which they have saddled this country. The credit rating agencies have put the UK's triple A rating under review. All the Government's borrowing forecasts are predicated on the assumption that that rating will remain. Should it be reduced to a double A rating, for example, that would, in itself, have a significant impact on the cost of funding existing Government debt and would raise significantly the cost of the future Government debt that we need to raise in order to meet these enormous borrowing figures. I urge the Financial Secretary to give some indication as to the thought process that the Government have gone through and the cost involved should that unfortunate reduction in rating arise—of course, none of us wishes that to happen.

Stewart Jackson: My hon. Friend is making very good points. He will know that had the 5 March announcement of an increase in quantitative easing been made under the previous Conservative Government, we would have heard outraged voices from the then Labour Opposition about the debauching of the currency and of the economy. Does he deprecate the fact that to this day we have still not had a proper and full debate in Government time on the specific issue of quantitative easing?

Philip Dunne: My hon. Friend makes a powerful point. It is the most significant and rapid collapse in the public finances, and the most significant about-turn in Government action to try to revive the economy, that we have seen in our political lifetimes. It is astonishing that the Government have not been prepared to stand up and debate in this House why the quantitative easing measures that they have proposed, and are implementing through the Bank of England, are the right approach to take. Those measures are referred to, as it were, in parenthesis alongside other debates about the economy, but we have not had a significant debate on quantitative easing, and that is highly surprising. I wonder why not.
	I shall touch on three specific measures in the Budget. The first is pensions. The reasoned amendment highlights the inconsistency of the Government's approach to pensions, as evidenced by the measures in the Bill. The Government took a relatively mature approach to the self-evident looming pension crisis. The introduction of the new regime on A-day only three years ago was detailed and considered. It followed detailed and prolonged industry consultation over the previous 18 months by Lord Turner, who has now been promoted—if that is the right word—to chair the FSA. The Turner review was a reaction to a demographic challenge and medical improvements. The problems in the pension industry had been compounded by the impact of the previous Chancellor's assault on pensions in 1997, and the consequent collapse in savings, which all contributed to the time bomb in pension provision in this country.
	The Turner proposals were adopted more or less wholesale by the Government as a start in encouraging greater self-responsibility for pension provision, but the measures in the Bill demonstrate a significant reverse in that approach. I wonder to what extent the Chancellor has consulted Lord Turner, let alone industry experts. It seems that the Treasury recognises that it has not thought through the full implications of what is proposed in the Budget, because it was also announced that a consultation would be held
	"on the best way to implement this reform, to ensure that the different categories of pension scheme used by individuals are treated fairly."

Philip Dunne: My hon. Friend is absolutely right, and I shall go on to talk about the problems created by the Chief Secretary herself in relation to the VAT scheme.
	As I said, four or five years ago the Government adopted a mature approach to the issue of pensions. They wanted to put in place something that was, if possible, the result of political consensus—which was broadly given—and was accepted by the industry, so that the new regime would endure and would not be tinkered with. Individuals need that certainty even more than institutions, because they need to make a commitment to a long-term pension investment over decades. They should not be messed around from Budget to Budget by finickety little changes. The measures in the Budget are not finickety little changes: they are a significant reverse in the Government's whole approach.
	The language that the Treasury used is extremely revealing, talking as it does of fairness between schemes. One consequence of the measure to restrict income tax relief for higher-rate taxpayers is to focus attention on the increasing disparity between final salary and defined contribution schemes. There are, of course, fewer beneficiaries of final salary schemes than there were when the Government took office. The figures that I have do not go back quite that far, but in 2000, 18,100 defined benefit schemes were open to subscription. By 2007, that had declined to a mere 2,370 schemes still open for members. The number of members in those defined benefit schemes declined over that period from 8.6 million to 6.2 million, meaning that nearly 2.5 million fewer people were on defined benefit or final salary schemes.
	Almost all that decline came from the private sector. At the end of 2007, there were only 1.3 million members of private sector defined benefit schemes, whereas in the public sector there are still 4.9 million members in final salary schemes. A further 1.8 million are still in schemes that continue but have been closed to new members. The vast majority of those closed schemes are, of course, in the private sector, with some 1.4 million people still in final salary schemes that are now closed to new members. That illustrates the scale of the decline in pensions presided over by this Government.
	I labour this point because the capping measures for high-income earners and the forestalling measures that were referred to earlier in the debate will merely accelerate the trend away from final salary schemes. That will apply mostly in the private sector, leaving the public sector final salary schemes increasingly exposed to public scrutiny and criticism, which I expect has not even occurred to those on the Government Benches. That will expose the increasing lack of fairness. Those who are still entitled to final salary pensions will be protected not only from the mortality risk but from the investment risk, whereas those who are in defined contribution schemes will continue to have to bear both risks in the pensions that are ultimately paid out to them. Decreasing mortality means lower returns for defined contribution schemes, because providers have to assume that we will all live longer.
	By taxing contributions at 20 per cent. on the way into schemes—the defined contribution schemes of the vast majority, as contributors to such schemes by definition have to pay in a much higher proportion of their salaries than those on final salary schemes, particularly in the public sector—as well as income received from pensions on the way out, there will be an increasing disparity with those who remain in final salary schemes who are high earners. We are talking about a relatively small number of people who will be affected, but the fairness issue applies across the final salary scheme membership. This measure will require considerable debate within and between Government and Opposition to ensure that there is fairness in the way in which that provision applies to those who are fortunate enough to be in final salary schemes.
	The second issue that I want to touch on briefly was mentioned by my hon. Friend the Member for Mid-Worcestershire (Peter Luff), the Chairman of the Business and Enterprise Select Committee, and concerns clause 9 and the extension of reduced standard rate and anti-avoidance provisions for VAT. The Chief Secretary was present at a meeting yesterday of the British Retail Consortium, held in Portcullis House, at which I was also present. It was quite clear that she was seeking to give the impression to the retailers present that the proposals for the termination in the cut in VAT were not set in stone. At that meeting, and again in the House, she referred to the fact that HMRC is prepared to engage in active discussions with retailers to seek to mitigate any problems that arise. That reverses the intention of the provisions.
	The provisions are designed to provide the sort of certainty that my hon. Friend the Member for Mid-Worcestershire described, so that people know where they stand, by deferring the cut-off date from 1 December to 31 December—at not inconsiderable cost, as other hon. Members have said. The Chief Secretary has just thrown that into confusion by suggesting that HMRC would be flexible in its interpretation. I am not sure whether that extends to being flexible in its interpretation of when the month of December ends, as many retailers have a month-end that is not coterminous with the calendar month end.
	As has been said, on 31 December many retailers will be in the height of the early days of their post-Christmas sale, as such sales now tend to start not on 1 January but on Boxing day or even before that. A great deal of price-changing will therefore be going on in the run-up to the change proposed by the Chancellor. That is entirely characteristic of this Government, who have sought to introduce a measure without thinking it through properly, and without consulting in advance those people who are likely to be most affected—a measure that will have the consequence of creating, as the Government did when they first introduced the VAT cut, a considerable added burden of work and expense for the retailers whom they think they are benefiting.
	I urge the Financial Secretary not only to bring clarity to this situation, but before the conclusion of the Committee Stage to engage with the retail industry to try to come up with a sensible compromise—a cut-off date that will not engage retailers, at one of the busiest times of the year, in a great deal of extra work for no particular benefit to them. Retailers typically change their prices over a weekend. Major companies can do it all on a computer programme. Small retailers have to go round sticking all the prices on the goods themselves. That is a very labour-intensive process. It is costly for the retailer. They have to do it, typically, at night or on a Sunday, so they are paying overtime. That is not an easy thing to do in the middle of a very busy trading week. If I sound slightly anxious about that, it is because, having been a retailer, I know something about it.
	That brings me to the third specific measure that I wanted to mention, which, I am afraid, also relates to the retail trade in particular although it impacts on many other businesses—the issue of trade credit insurance. I tip my hat to the Financial Secretary for introducing a measure that, while overdue, has been welcomed by the industry and is an important plank in trying to help keep businesses trading.
	The use of credit insurance in trade in this country has become increasingly prevalent in recent years, but it is extremely reliant on a very few providers. Three providers—two large, one small—undertake the vast majority of credit insurance provision in this country. This measure will be of benefit to many companies, but many others—thankfully, a smaller number—will not be able to take advantage of it, because although the scheme is estimated by the Government to apply to some 14,000 businesses, it will apply only to those which have lines of credit insurance in place on 1 April.
	I am sure that Members will have received representations from businesses trading in their constituencies from whom credit insurance was removed prior to 1 April, as I have done. Some of them are quite significant companies. I am thinking of one that is a supplier to a major high street chain. That chain had its credit insurance lines pulled in the first quarter of this year, which means that hardly any of its principal suppliers are able to supply goods to it. It is still trading, somehow, but the arbitrary 1 April cut-off date means that a number of businesses that are trading adequately will find it increasingly difficult to continue trading if they are not able to get goods on the shelf.
	I accept that the Government do not want to put themselves in the position of assessor of credit risk; that is a job for the banks and the credit insurers. However, the Government ought to have listened to some of the voices that said, way back at the beginning of this year or the end of last year, that such a measure was vital to keep businesses trading. Indeed, in January the Secretary of State for Business, Enterprise and Regulatory Reform publicly stressed his concern about what he called the "immense financial distress" placed on companies as a result of the loss of such cover.
	It seems regrettable that despite all the discussions that took place in the first quarter of this year and at the back end of last year, the Government did not think to introduce the measure then. Perhaps that is because it is somewhat close to the national guarantee scheme proposed by Conservative Members, and the Government did not want to be seen to be taking up yet another of our ideas. To emphasise my point, I will quote Jane Milne, business director at the British Retail Consortium, who was present at the meeting yesterday. She described the scheme as
	"much needed but...too little too late. Matching the trade credit insurance that private insurers are willing to provide is vital to helping fundamentally sound businesses weather the recession. But the unannounced detail confirms this safety net will be denied to companies whose cover was cut before 1 April, meaning the plight of many is being ignored.
	For retailers to survive and keep people in work they need to keep shelves stocked with the goods customers want. Insurers began removing cover as the downturn started to bite this time last year. The Government's scheme should apply from then"—
	that is, from 1 April 2008, rather than 2009. Again, I hope that the matter can be taken up in Committee.
	To conclude, there are measures missing from the Finance Bill that would help to address some of the vital shortcomings in the Government's approach to tackling the economy that I identified at the beginning of my remarks. There are hardly any measures in the Bill to encourage entrepreneurial incentive. There is a modest measure for increased capital allowances, but that really applies only to existing businesses, not to those that are growing significantly, although it might help in some isolated cases. There is very little help in the Bill for small businesses, the lifeblood of our economy, from which all big businesses emerge.
	If the Financial Secretary gets out and about, as I imagine that he should, and talks to entrepreneurial clubs and groups of business men up and down the country, he will find that surprisingly large numbers of people responsible for significant businesses—businesses are increasingly mobile in this global economy—are actively considering relocating their centre of operations, or their business in its entirety, to outside the country. That is because they see the approach that the Government are taking, which is not to encourage entrepreneurial activity in this country. That is a great worry for this country, as is the question of how we will be able to weather the recession and retain a strong level of employment in years to come.
	Secondly in my concluding remarks, there are very few measures in the Bill to encourage savings, and they are complex. Why was the welcome increase in the individual savings account limit staggered over two six-month periods? It defies any kind of sensible logic. I hope that that, too, will be pressed in Committee. The proposals contain little significant incentive to encourage the take-up of savings.
	Thirdly and finally, the Bill betrays a lack of competence at the heart of Government in handling the economy. We have seen what has happened to the public finances over the past 12 months. That tells a story in itself. There is a complete absence of vision on the Government's part as to how they will be able to drive the economy out of the mess that they have driven it into. If they are incapable of vision to get the economy going again, they should go themselves.

John Redwood: I am a director of one company and a director and a shareholder of another company, and have declared that in the Register of Members' Interests.
	The Budget judgment before us, which we must think about in this Second Reading debate, is the Government's judgment that they need to increase spending at a rapid rate, that they need to make some modest—as they see it—increases in tax revenue, not in the immediate year but in subsequent years, by raising rates for the rich, and that they need to bridge the rest of the gap by very substantial borrowing.
	In the opening exchanges, we heard different positions being set up. I am firmly of the view that the Government are running undue risk with the huge gap between spending and revenue not just in the current year but in the years ahead, particularly in the subsequent year, about which the Budget makes a judgment. I would like to see that gap smaller, and I would wish to achieve that by controlling expenditure rather more than we are witnessing under this Government.
	This is not primarily a debate about public spending. I have set out at least 17 ways that I immediately see of making reductions, some very big and some quite modest but illustrative. The culture in government needs to be changed so that more is delivered for considerably less. That is not difficult, because the inefficiencies are so gross and the overstaffing on the administrative side is so enormous:  The Guardian jobs pages show us that there is no idea of imposing any kind of control on staff numbers and gaining proper value for money for taxpayers.
	That is what I would address, but first let us look at the situation in the Government's terms. They have invited us to support a Finance Bill based on two worrying propositions—first that they should spend that much, which I do not think they should, and secondly, that they should raise so little, given the amount of spending that they wish to do. In their own terms, if they wish to do all that spending and, unlike me, think that every pound of that is providing value and is much sought after by taxpayers, they should be prepared to be honest with the House and say, "That's the bill, and we need to raise more in taxes, not next year, the year after or when there may be another Government in place. We need to be honest with the public and raise some more money in taxes this year to meet all those spending bills."
	So why, then, do the Government not do that? Obviously, because there is a general election coming up and they know as well as any other elected politician that increasing taxes is very unpopular. As their cover story, they claim that their spending is reflationary, and that it will be good news for jobs and for the economy if this year—by coincidence, a pre-election year—they spend so much more than they raise in taxes.
	The economic effects of forcing savings from people are similar to the economic effects of taking taxes from them. If the Government are serious about borrowing all that money from individuals or from companies in the United Kingdom private sector, it has more or less the same effect as if that sum were taken off in tax, because for every pound that they borrow from the UK private sector for this so-called reflationary spending, the private sector has £1 less, so it cannot provide the jobs or buy the goods that it would otherwise use that money to do. It is, instead, providing it to the Government. In their own terms, their argument for under-financing their huge expenditure by such a big margin is unlikely to work.
	That is not the only thing that the Government have done in their desperate and belated attempt to turn around the massive recession that their policies, allied to problems throughout the world, have undoubtedly created for Britain. I am strongly of the view that it was policies made in Britain that made the banking crisis so bad here, and that the manic and deliberately perverse monetary policy that the Government and the authorities followed first created a bubble, then created a crash, and is now desperately trying to find a way to reflate and inflate from the crash site rather late in the day.
	Monetary policy is an extremely powerful weapon, however, so the heavy lifting to try to turn the economy around will be done not by the Budget, because it will not be nearly as reflationary as the Government suggest, but by having interest rates at almost zero and by gradually nursing the banking system back to strength. I am not a gloom-monger who says that we are going into a 10-year depression and never going to come out of it; monetary policy is very powerful. The reason why we are in crash mode is that the monetary authorities got their monetary policy completely wrong by being far too tight in 2007 and at the beginning of 2008. They are now trying to produce a much looser monetary policy, which started last autumn, and in due course that will definitely have a beneficial impact. It will start to lift some of the gloom, slow the rate of decline and in due course, if other things do not get in the way, turn things around from their current very bad position.
	I do not believe that the Budget will turn the economy, but nor am I saying that it will always get worse at the current rate, because that argument would be quite obviously untrue and rather foolish. We all live in this country, we want it to do well, we wish to see more of our constituents with jobs and more businesses to flourish, and we wish monetary policy well. We are more worried about the impact of the Budget, because its tax measures will undermine competitiveness, enterprise and job creation at the margin—or in some cases more than at the margin—and that is not what the Government should be doing with a taxing Budget at this stage in a violent and unpleasant cycle.
	My right hon. and hon. Friends are naturally very concerned that the Government will not be able to borrow all the money that they need in the next few months to bridge the gap, and my right hon. and hon. Friends therefore say that either taxes need to be higher or expenditure needs to be lower to secure a tighter Budget. They should bear in mind the fact that the Government are trying to load the dice in favour of their getting away with it for a few months, but that their Budget has a time horizon that stretches only until the next election. It is apparently set within the framework of wanting to get the next three or four years right, but nobody really believes the forecasts, and if we look carefully at the tax measures, we see that they take the form of a Tory tax trap. They are political taxes; they do not seriously try to fill the big void in the public accounts, even after the following election. They are in the Budget for illustration, and probably for spite. They are not there to deal with the colossal black hole in the figures.

John Redwood: That is absolutely right. The Treasury Committee has come to a very sensible view and asked the right sort of questions. Private forecasters are now saying that such a tax increase could actually reduce the amount of revenue by driving some rich people out of the country altogether, and making others work less hard or put less money at risk.

John Redwood: I am sure that the hon. Gentleman does. He is a better politician than he is giving us to believe with that rather childish intervention.
	The Government's idea was crude and simple—"Let's put this down for a future year. We don't actually think it's going to raise very much revenue." Perhaps they did not believe it would raise any at all. They saw it as a win-win situation for Labour. If the Conservatives voted it down, Labour would spend the next year going around the country saying, "The only thing the Tories care about is rich people and their marginal tax rate." If the Tories voted for it, Labour would go around the country saying to people who might otherwise vote Tory, "Look, the Tories are useless. They don't even stand up for your kind of proposals, and they aren't really the party of enterprise after all."
	We do not intend to play that game, which has turned out to be a lose-lose for Labour. It has pitted an important part of the business community against the Labour Government, because the business community is not impressed by their reneging on the clear promise that I remember them making at the last general election that they would make no changes to the overall rates of income tax at any level.
	The change has also pitted Labour MP against Labour MP. We know that the Blairite faction is extremely unhappy with it. The Blairites thought that the fact that the previous Prime Minister had accepted the Conservative settlement on tax prior to 1997 was a very important part of winning over floating voters in middle Britain whom Labour needed to win over to form a Government again. They believe that it is disruptive and a clear tearing-up of that element of the new Labour settlement that the Government have now decided to go from 40p in the pound to 50p. Indeed, at the margin it is rather higher than that if we take into account the changes to allowances, pensions, national insurance and so forth. Far from being a trap for the Conservatives, it has been another factor in the growing civil war between Blairites and the supporters of the Prime Minister.
	There will be those on the left for whom the change does not go far enough. They think that this crisis is a good opportunity to increase the rate to 60p, 70p or 80p—the rates they were used to in previous periods of government. However, there are others on the Labour Benches who understand that in a globalised and footloose world economy—whether we like it or not, we have to live with it—it is all too easy for people with money, talent, capital or high incomes to say, "I won't base my activity here any more, I'll base it somewhere else—I'll go to Dublin, the Bahamas or Asia," because the Governments in those jurisdictions really want talented people and new businesses. There are jurisdictions that wish to give a home to businesses that might otherwise have been located in London or Britain. That is the danger that we now face.
	In other respects, the Government claim to believe that putting a tax up means having less of something. For example, they are busily increasing the tax on gas-guzzling cars because they want fewer of them. They are also increasing the tax on drink, because they want people to drink less. Probably only the ministerial drinks cupboard will be well stocked at the new duty rates, because public spending is still in free flow, whereas other people are expected to reign back, which we are told is good for their health. The Government believe that increasing duty on tobacco means that people will smoke less and that fewer cigarettes will be sold.

John Redwood: That is absolutely right. Just as there is a contradiction between the Government's tax policy on the one hand and their so-called reflationary policy on the other, because some of their taxes will clobber jobs and business, so there is a conflict between their reasonable wish that people on lower incomes should have a better deal and the tax policies that they are pursuing.
	The most regressive tax in the Budget is the fuel escalator. A lot of people on modest incomes need to use a car. They need to buy fuel, but often they cannot afford to buy the more fuel-efficient vehicles that better-off people can afford. The Government are deliberately targeting people on low incomes to pay more tax as some kind of penalty.
	At a meeting earlier today, I heard about some of the plans for the water industry that I think may have the Government's approval. The implication was that we will have to pay more for our water because the Government want to raise revenue by selling off licences for extraction. We await the legislation enabling them to do that on a big scale, but they are doing it already on quite a big scale to pay the costs of the Environment Agency.
	If that is a serious proposition, it is an even clearer example of what I and my hon. Friend the Member for Braintree have just described—that those on the lowest incomes will face the biggest proportional increase in the price of a basic requirement that the Government believe should be rationed by price.
	The most obvious example of that involves motorists in London. Only extremely rich people are now able to drive regularly during the day in central London. Motorists have to pay £8 a day out of their taxed income to use the road, as well as meeting all the fuel duty, vehicle excise duty and other costs incurred in running a car. In addition, fuel use in London is especially high because the regimes of the Government and the previous Mayor have made travelling around London freely extremely difficult, which increased the amount of fuel burned and therefore the cost for Londoners.
	There is a strange conflict in this Labour Budget—the party that wishes to be the party of the people is actually clobbering the people, and the poorer people are the more they get clobbered by specific taxes on things that they have to buy. The other dilemma is that a Budget that wishes to be reflationary contains a series of tax proposals that are anti-enterprise and anti-business, and which target specific sectors of the business community especially severely.
	The Budget papers also reveal a further development in the Government's surveillance and control activities that is far from welcome. One thing that is doing the most damage to the Government's reputation among the wider electorate is their complete compulsion to control every aspect of our lives. They want to eavesdrop, carry out surveillance and impose cameras on us; they want to inspect and audit us, and they assume that everyone is doing wrong until they can prove otherwise. I am afraid that the Bill is another example of that.
	The tendency is not confined to the Home Office and the hapless Home Secretary. What I have described is also being done by the Chancellor of the Exchequer and his junior Ministers. The Bill has some tough clauses strengthening the powers of Revenue and Customs to intrude on lives and business and individual records, even when they have no reason to suspect that the people involved are criminals. The proposals will give people a very nasty feeling: they will make the relationship between state and citizen that much more unpleasant and put everyone on edge. They will also create extra cost and harassment of a kind that is very unpleasant.
	I believe that the Government, in their own interests, should revisit the proposals before the Bill is finalised. Opposition Members have drawn attention to the problem. We do not like the proposals, and think that many of our law-abiding constituents will find them very irksome and unpleasant. Above all, however, the proposals that I have described do damage to the Government, because they reinforce the view that the state is all-bossy and wishes to be all-knowing. The Government seem not to trust anyone at all, but to believe that every taxpayer will be up to no good unless they take extremely draconian control.
	I suspect that the Government's approach is the result of two things. First, it is the result of politics, because some Labour Members believe—quite wrongly—that all successful people are tax fiddlers who must be hounded out and purged. Secondly, it is the result of the Government's theory that they will one day find the crock of gold containing all the billions that the rich have been hiding all these years. The fact that they have not got to grips with the cash before means that it will be an easy, soft option for filling the hole in the accounts.
	I am afraid that I have news for the Government. I am sure that the intelligent Ministers realise that there is no such crock of gold—if there were, Governments over the generations would have found it by now. It does not exist: to get out of the colossal deficit that is the centrepiece of and background to the Budget the Government either have to impose a lot more tax on everyone, or exert much better control over public spending.
	The Bill, like all too many of its predecessors over the past decade, is an enormous piece of work. It is 433 pages long, with 61 schedules and 126 clauses. This becomes a burden in itself. How can business people, who are worried by the recession, trying to preserve the jobs of their work force and desperately trying to sell a bit more product and raise the quality of their service, be expected to get their heads round 433 pages of changes to tax law, some of which are extremely complicated? If they do not do so, however, the Government will say, "There you are. These people aren't serious. They are not good directors and managers of businesses. They did not understand page 417 and they should have done." They will then use the new draconian powers to call people in for questioning, or worse. It is not fair to impose so much on people when they are desperately worried about the state of the markets and the state of their companies.
	One problem that I fear the Government will have to revisit is that of revenue collapse. I said earlier that I was not a doom-monger. I do not think that we will stay in recession for ever; I think that, at some point, easier money works. However, I do think that this will be a very deep and long recession by post-war standards; it looks as though it is going to be the longest and deepest by quite a long way.
	In my experience, the Treasury always gets the figures wrong both ways: it always underestimates the amount of revenue that will come in when the economy is growing a bit faster than it expects, and it always overestimates the amount of revenue that will come in when the economy underperforms. I fear that its models are not revealing just how big a drop in revenue there will be. There must, for example, have been a catastrophic drop in stamp duty, because there are so few housing transactions and because house prices are now 20 per cent. or more below the peak levels. There will also have been a very big drop in corporation tax. We know that some of the largest profit-makers of yesteryear were the banks, and that the biggest bank—now a state-owned entity—has managed to lose £24 billion instead of making billions. Corporation tax revenue must be well down.
	We also need to factor in a big reduction in dividend tax revenue. The banks accounted for a high proportion of dividends being paid; I think that they paid about a quarter of all the dividends on the all-share index in 2007. Some will now be paying little or no dividend, while others will find themselves in straitened circumstances, so there will be nothing like as much dividend income coming in from one of the big sectors. I suspect that some of the other cyclical sectors will also suffer big reductions in pay-outs and, therefore, in tax revenue.

Brooks Newmark: I am delighted to follow my right hon. Friend the Member for Wokingham (Mr. Redwood). When it comes to Finance Bills, he is indeed primus inter pares. He spoke almost note-free for, I believe, 45 minutes. That shows the breadth and depth of the experience that he brings to the House, and I could not disagree with a word that he said.
	I used to be in business. Although I have now wound down my interests, I draw the House's attention to the Register of Members' Interests, which makes it clear that I retain a couple of interests from my previous life.
	I shall begin by reading the opening lines of the Bill, because they lay the foundation of what we are debating today. This, it is said, is a Bill to
	"Grant certain duties, to alter other duties, and to amend the law relating to the National Debt and the Public Revenue, and to make further provision in connection with finance."
	I begin with that foundation because it is the Government's balance sheet that gives me—and, I think, the markets out there—the greatest concern.
	I want to say a little about borrowing and debt. When the Prime Minister became Chancellor, he made great play of two important rules: the golden rule and the sustainable investment rule. The first said "We must keep the debt-to-GDP ratio at about 40 per cent., which is an important benchmark." The second said "We must not invest and then borrow more; investment and borrowing must balance over the economic cycle."
	The Government and the former Chancellor, now Prime Minister, set great store by those rules for a long time. As we have heard today, the Prime Minister talked a huge amount about ending boom and bust. In fact, he thought, like Canute, that he alone could hold back the tide of the economic cycle, and end boom and bust. When history is written, however, it will show that the Prime Minister whom we have today led the biggest boom and the biggest bust that we shall have seen for nearly a century. It was only a year ago that we saw public-sector net debt at 2 per cent. of GDP. Twelve months later, we pick up the Red Book and note that the budget deficit will be around 12 per cent. of GDP. That is a 10 per cent. leap, and represents a huge change in what the Government were saying a mere 12 months ago.
	To make matters worse, in 1998 the Prime Minister said:
	"We are committed to steering a path of stability based on a stable monetary framework and sound public finances."
	Today, that statement seems ridiculous to all of us. Again, when we pick up the Red Book, what do we see? We see that in 2013-14 the debt-to-GDP ratio in borrowing—on-balance-sheet borrowing, that is—will be 79 or 80 per cent. The Government keep repeating that that is within the realm of what we see in other G20 countries, but none of us are fooled. I have spent the first four years since entering Parliament trying to dig a little deeper. One of the things that scared me when Enron collapsed was the thought that occurred to me: "Gee, I wonder how much the Chancellor"—the Chancellor of the day—"has put off balance sheet." After I began digging, about two and a half years ago I wrote a paper for the Centre for Policy Studies called "Simply Red." That paper showed that for every £1 that the Chancellor was putting on balance sheet, he was putting £2 off balance sheet.

Jacqui Lait: I do not want to interrupt my hon. Friend's flow, but I wish to ask what his view is of the reports from the National Audit Office and the Audit Commission, both of which recommended that all of these off-balance-sheet items should go on balance sheet. It is my recollection that the Chancellor, as the Prime Minister then was, said it would be done under some obscure European legislation.

Brooks Newmark: My right hon. Friend makes an excellent observation. It is a sad reflection on the Government that their own Back Benchers have no confidence in their Budget or their Finance Bill, and do not wish to make any contribution to the debate or come to the Chamber to defend it. That is the shameful state of the Government today. As a Whip, I sit through many debates, not only on the economy and finance, so I know that Labour Members often hardly bother to turn up.
	Part 1, clauses 1 to 6 contain the provisions on income tax. I was taken by a headline that I saw on economist.com which said it all:
	"Gordon Brown's budget is a dishonest piece of pre-election politicking".
	That is from  The Economist, a well respected magazine, and it is especially symbolised by the Government's approach to taxation. We have heard much today about the new 50p band. The Institute for Fiscal Studies, another respected body, predicts that that tax will generate "almost nothing". That is because many high tax earners, especially those who work in the financial services sector—not in manufacturing, because that sector has shrunk to below 15 per cent. of GDP, perhaps even as low as 13 per cent.—are mobile and they will leave. It is a competitive world and people will move where tax rates are more competitive. With one move, the Chancellor has said to those people—to entrepreneurs and those who want to build up their businesses—that he is taking away the welcome mat from UK plc. Those people are no longer welcome here and they will feel that they may as well go elsewhere.
	The Government often claim that the Tories are for the few, not the many. But when one peels back the layers of the onion on the Finance Bill, the reality is that the majority of people who will be hurt by it are those earning around £19,500 to £20,000 plus. They will be hurt particularly badly and punished the most by this Bill. So it will hurt the many, not the few, because the few can leave the country.
	At the beginning of the debate, the Chief Secretary was pressed on several issues to do with child poverty reduction. She gave no answer on how close we were to achieving the Government's target of halving child poverty by 2010, but she threw back at us the allegation that we do not support the Government's aspiration to eradicate child poverty by 2020. I want to say here and now that of course we do. We absolutely support the Government's aspiration to eradicate child poverty by 2020, and I suspect that after next year we will go a long way towards achieving that goal.
	I turn now to clauses 11 and 12 on alcohol and tobacco duties. As I mentioned to my right hon. Friend the Member for Wokingham, these taxes on alcohol and tobacco are highly regressive. Unfortunately, the poorer members of our society—the less well-off—spend a higher proportion of their income, their wealth or their benefits on smoking, driving, alcohol and other such activities.
	The Conservatives have come up with what I hope is a more creative way of targeting this, which involves targeting alcopops. I believe that my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) talked about that at the beginning of the debate. The Government seem to be using a blunt instrument with this tax on alcohol, rather than being sharp about it and focusing on the real issues, such as alcopops, which teenagers tend to drink and which tend to cause the problems that we all see in our constituencies on a Friday or Saturday night.
	Equally importantly, the tax is another nail in the coffin of many of our pubs. I live in a semi-rural constituency and I know that many of my publicans are feeling incredibly hard-pressed after the change in the rules on smoking. They are now being taxed more and more on alcohol. I feel that we will see many more of our pubs—particularly those in our rural constituencies—fall by the wayside.

Jacqui Lait: It is indeed an honour and a pleasure to follow my hon. Friend the Member for Braintree (Mr. Newmark) in his expert exposition, and demolition, of both the Budget and this Finance Bill. If one conclusion has emerged from the debate this afternoon—I have listened to many of the contributions, despite not being able to be in the Chamber, for which I apologise—it is that every contribution has revealed a remarkable level of expertise. I commend the Members who have contributed.
	In my view the Government's answer to the recession that, fundamentally, they have created in this country should be in both the Budget statement and the Finance Bill, but both are sadly lacking in the measures that are required to set this country back on to the recovery path. The Government have fallen into the trap that opened up in the South Sea bubble, or before the great crash of '29. When we say that this is the worst recession since the second world war, I would point out that what immediately preceded the second world war was the great depression, so in essence we are comparing 1929 and 2009. I do not think that the Government have grasped that, and the scale of the problem that they face, given the proposals in the Bill.
	My belief is that the Government are still—I say this politely—in cloud cuckoo land or even never never land, but I actually suspect that, as many have said, they are still in denial. Or perhaps No. 10 and the Treasury are surrounded by an impregnable wall of arrogance, and nothing anyone says about the problems that our country faces can get through to them.
	The other problem that we face, which has also emerged time and again from the contributions, is that this Finance Bill has been written very hastily. The Budget was written hastily, as a response to the G20. It was meant to be a financial triumph. It has turned into a mish-mash of proposals that were a reaction to what happened at the G20 meeting and in the events leading up to it. The Finance Bill was produced very rapidly—uncharacteristically rapidly—thereafter.
	Sadly, as a result of the measures that the Government have taken in the past 12 years on how the House examines legislation, this Finance Bill will not get the scrutiny that it deserves, and which it needs if it is to deliver the sort of recovery that our people deserve and need. It was a dereliction of duty on the part of the Government to have put in place the forms of examination that they did.
	As my hon. Friend the Member for Runnymede and Weybridge (Mr. Hammond) pointed out, the Finance Bill should be setting us on the path to competitiveness for when we move out of the recession. We should also be building in improvements in productivity. Sadly, without those two bases, we will not even begin to be able to recover our position in the world—the position to which Margaret Thatcher and the Conservative Government of the '80s restored us after the calamitous '70s. The challenge that any incoming Government will face is to get us back up the competitiveness and productivity tables, so that we can deliver a better lifestyle for our people.

Jacqui Lait: Of course I will, Madam Deputy Speaker, but I just point out that taxation is, of course, related to the costs of the Government, and part of the costs of the Government are the quangos. The quango in question, the LSC, is about to be replaced by three more quangos. Nobody can say that that is an efficient delivery of money to sixth forms, for which we require good education so that we can deliver the competitive economy that we will need for the future. That is the scandal of so much of what the Government have done.
	Instead of creating systems, so that business can modernise, invest and take that great big step forward that it needs to take, the Bill and the Budget weigh business down with yet more bureaucracy. It is appalling that for the past 10 years, the Finance Bill has had to come in two documents, as I think that my right hon. Friend the Member for Wokingham (Mr. Redwood) pointed out. Each year, every accountant, company director and finance department has to plough through the implications of an inch of new law. That is no way to create a competitive economy. We should go back to a simplified system. The Government should not micro-manage, giving a little bit here and a little bit there as they decide which way a company should go. It is up to the business to make decisions about its direction. The tax system should support those decisions, not hinder them.
	The same argument applies to issues of productivity. Instead of being able to invest in systems that help our people to become more productive, the British economy is becoming ever less productive because of the expansion of the public sector overall. Sadly, unless and until we can change that whole approach to productivity, and take the dead weight of the public sector off the backs of those people who are delivering our wealth, we will not be able to deliver better living standards for our people.

John Hayes: My hon. Friend will understand that as an economy advances it becomes more complex, which is further complicated by the global nature of trade; that means that when Government pull policy levers, the results are less and less predictable. Will she invite the Minister, specifically in relation to the Finance Bill and the changes that it introduces, to consider whether those reactions to policy levers are likely to be as speedy as economic models currently used by the Treasury assume, or whether they will bring with them large deadweight costs, and what measurement the Government have made of those?

Jacqui Lait: I am grateful to my hon. Friend. I will not reiterate the point, as the Minister has heard it. It is all part of the argument that we are putting forward about the failings of both the Budget and the Finance Bill.
	The Bill does nothing to help savers and pensioners. Savers are still suffering from a 0 per cent. interest rate. There were some thoughts that savers might get some sort of help in the Budget or Finance Bill, but there is no sign of that. In a borough such as Bromley, which has the highest proportion of retired people in London, those people are hurting because they are not able to rely on any income from their savings.
	Pensioners also are not helped by the Budget or the Finance Bill because they are affected by the reduction in the funds available to them, and because so many of them have to buy annuities when interest rates are so low. There is also the problem, which has been so eloquently described, of the impact of the reduced contributions that people earning more than £100,000 will be able to put into pension funds. Those contributions enhance a pension fund almost disproportionately, and it is counterproductive to a stable society for pensions to be less good than they should be. Nobody, as far as I am aware, has referred to this: the ghost of Barbara Castle must be walking with her head in her hands through these halls, horrified at the damage that has been done to her occupational pension schemes.
	We have heard many contributions on the impact of the 50 per cent. top rate of tax. We talk about the disincentive effect on those who are genuine wealth creators, and I totally agree on that point. What we have failed to recognise, if I may gently point it out, is that that also impacts on head teachers and doctors—the sort of people on whom we rely for our public services. They have no option of moving money offshore. They will be disincentivised from trying to deliver better education and better health.
	I have been struck by the number of my constituents who contacted me about the impact of the fuel duty on their lives. They live in suburban London. I am the MP with the most railway stations in my constituency of any in the country. By most calculations, we should have good public transport. However, I do not fall into the category of those who believe that we have good public transport. Cars are as necessary in suburban Bromley and suburban Beckenham as they are in rural areas.
	We have an estate agent who depends for her income on commission. That commission will be eaten into in very hard times by the increase in petrol tax. No thought has been given to the impact that the tax will have on people who depend on their Motability cars, on the very tight income on which most people who are disabled have to live, or on pensioners, who are already on very tight budgets. That increased petrol tax, and the promises of more to come, will have a seriously adverse effect and help to isolate people who need to get out and make contact with others.
	Although the scrappage scheme is not included in the Finance Bill, it was announced in the Budget, and I have serious worries that its impact and interaction—

William Cash: I am talking about specific measures in this domestic legislation that are based on overarching European requirements. These days, if a person picks up any piece of legislation, opens it and looks halfway down the page, they will find something based on a European provision. Clause 56 of the Bill, for example, is entitled "MEPs' pay, allowances and pensions under European Parliament Statute".
	However, that is just one aspect of it: my concern goes much deeper. Through the aegis of the European Court of Justice, European legislation is expanding its tributaries into the tax field. That will continue to happen, because however stupid and obsolete the thinking may be, there is still the belief that we must have European integration on the scale of a political union, despite the clear requirement to comply with the convergence criteria and with the underlying economic arguments on which our taxation is based—I assure you, Madam Deputy Speaker, that I am not going to go an inch over the boundary line in this debate. The consequences of the interaction between economic criteria, and the requirements to comply with those in terms of tax and spend, are all part and parcel of the problem that we face with the massive deficit that we have built up. If one looks at the Red Book—I invite you to do so, Madam Deputy Speaker, when you want some light reading—one will see that in the calculations relating to the amount of money by which we are indebted, the Maastricht criteria are contained in the footnotes, whereas they should be emblazoned in the headlines.
	The Office for National Statistics, because it is an honest body, stipulates the extent to which compliance with the convergence criteria is at the heart of many of the debt problems that we face in relation to the stability and growth pact. That is to do with the balance between taxation and spending. The requirements that are laid down are all related to the extent to which, under these provisions, the Government are struggling to find enough money to fill the hole that has been created by their wilful failures in running the economy and balancing the books, and the failures of the Prime Minister since he became Chancellor of the Exchequer in 1997 and right the way through to today, when everything he does turns to dust. The Treasury Committee, which is chaired by one of his own clan, has castigated the Government's golden rule and stabilisation proposals. Its report on the Budget says, on page 48:
	"We believe that the Chancellor should now engage in what we regard as a crucial debate about the future of the UK fiscal framework. The majority of our expert witnesses found fault with the Golden Rule and Sustainable Investment Rule, so an eventual return to an unreformed framework would seem misguided."
	It then, referring to its 2008 report on public borrowing, makes certain recommendations for a full public consultation. Of course, it is right.
	There is a gap between taxation, which is supposed to be raised under this Bill, and spending, which is now totally out of control, and the public debt. My right hon. Friend the Member for Wokingham (Mr. Redwood), my hon. Friend the Member for Braintree (Mr. Newmark) and I have pursued this relentlessly for many years. On 7 October last year, in the debate on fiscal rules, I pointed out—I think that I will have to use this expression, as euphemistically as possible—that we are not merely being misled, but that people outside are lying to us about the extent of the public debt. That is a very serious charge in relation to a matter of such incredible importance, but this country is being bankrupted. That is the problem, and that is why this Finance Bill is so important. The measure of its failure to meet the requirements demonstrates the failure of this Government.

William Cash: I think that if Members reread my speech tomorrow—I am sure that they will not, and I would not blame them if they did not—they will see that I am not saying that at all.

Christopher Chope: Exactly, Madam Deputy Speaker, you anticipate my every word. Thirty years ago, Margaret Thatcher took action to get our country back on its economic feet. This Finance Bill stems from a Budget that does not add up, and as a result it will be some 30 years from now before we are able to get back to where we should be, having got rid of this enormous overload of debt.
	The figures are mind boggling. They show that the Government will borrow £175 billion this year, and £1.4 trillion—a figure with 12 noughts at the end—over the next four years. In last year's Budget, public net debt was expected to be 39 per cent. of GDP this year, but it is now estimate at 59 per cent. and likely to increase to 79 per cent. by 2013-14.
	Those debts are unaffordable. The question raised by this Finance Bill is whether the imbalance between expenditure and income should be met by further taxes on the people, or by reductions in Government expenditure. I have no doubt that the Government have got the balance in the Bill wrong. They are delaying the expenditure reductions and saving some of the taxation proposals for a rainy day, so that in the run-up to the general election they will not be so apparent as they would otherwise be.
	I believe that this Finance Bill is so fundamental that we should have had a general election, so that it could be brought in by a new incoming Government. That is what has happened in Iceland: the Government there made a horlicks of the Icelandic economy—probably not as great as the horlicks that this Government have made of our economy—but at least they had the guts to go to the people and have a general election. That is exactly what should be happening here.
	There is a big gap between income and expenditure. One of the more important documents that I have seen over recent days is an article in last Thursday's  Financial Times written by my right hon. Friend the Member for Haltemprice and Howden (David Davis). I am not going to refer to the whole article, but his conclusion is apposite to what we are discussing today. He said:
	"The public are not fools and they are ready for politicians to think the unthinkable—70 per cent. see the need to bring public spending under control. They know that these issues will determine whether we slip unhappily into a miserable future in the economic second division, or find a route back to the vibrant and competitive economy we once were. They do not believe this government has the courage to tell them the truth. They are waiting for one that will."
	That sums up very succinctly the situation that we are in at the moment. When people ask us what we would do to reduce public expenditure if we were in government, it is only fair that we should be able to give them answers. Earlier in that same article, my right hon. Friend did just that.
	Ultimately, the way to reduce public expenditure is to create a climate in which the affordability of public expenditure can be questioned. In last week's press, we saw a commentary from a former Labour party adviser suggesting that 20 per cent. cuts in public expenditure should not be unthinkable. If we could create a climate in which people thought along those lines, we really would be able to make an impact on public expenditure and thereby reduce the taxation burden.
	Ireland is another country that has had a bit of a tough time in this economic downturn. There, they are reducing civil service pay by 10 per cent., and I think that Members of Parliament in the Irish Republic have also voluntarily taken a 10 per cent. reduction in pay. That might be saying the unsayable, or thinking the unthinkable, but that is exactly the kind of thing that is going on in the private sector at the moment. I have visited firms in my constituency where the workers are unable to work the hours that they used to, because they are on short-term working or losing their jobs altogether, and where the basic rates of pay and salaries are being reduced. Meanwhile, we have a burgeoning public sector and the Government are saying very little about how they are going to make the public sector affordable.
	A lot of the proposals dealing with tax in the Finance Bill will create unaffordable tax burdens on the British people. My hon. Friend the Member for Beckenham referred to fuel duty and vehicle excise duty. Before the Budget I had hosts of letters—as I am sure many hon. Members did—saying that there had already been an increase in fuel duty in April and that the Government must surely recognise that that was an additional burden on the hard-pressed motoring public, for whom vehicle use was a necessity rather than a luxury. What did we get in return? This so-called listening Government have announced a further increase in fuel duty on 1 May, followed by a further one in September—or is it October?—another one in April, and so on. It is totally unacceptable that the Government should fleece the motorist in an attempt to find a solution to the imbalance that they have created for themselves in the economy between public expenditure and income. Increasing fuel duty does not correct that imbalance.
	I hope that my right hon. and hon. Friends on the Front Bench will give us the opportunity to vote on some of these issues through amendments to the Bill in due course. The Government are proposing to burden the aviation industry a bit more, and to burden local taxpayers by increasing by a large margin the tax on waste products going into landfill. All those taxes have consequences—burdens on ordinary hard-working families.

Christopher Chope: I cannot predict what reductions in public expenditure will be needed by the time we have an incoming Conservative Government, but one thing I do know is that the longer that is delayed, the more drastic the measures will have to be. That is why I think we should have had a general election now; then we would have had a Government with the courage to face up to the necessity to control public expenditure now rather than at some time in the future. The hon. Gentleman may think that I am ducking his question, but I am being quite open in saying that we have to start talking in public about reductions in public expenditure of that sort of order if we are to be able to match our deeds to the climate of austerity that may be required.

Christopher Chope: I was not here for the earlier part of the debate, but I imagine that the hon. Gentleman asked his own Front-Bench team whether they would do what was necessary in order to balance the books. I do not know what answer he got. The issue at the moment, however, is that if we do not reduce public expenditure, the burden on hard-working families will be even greater. That is a point that I made earlier in the year, when I introduced a private Member's Bill on employment opportunities. As I said then, the minimum wage is currently £5.73 per hour. That equates to an annual income of £11,918 for a 40-hour week, but results in a tax and national insurance bill for £1,887 a year, leaving take-home pay at only £4.82 an hour. In other words, £1 an hour has been taken away from what the Government have said is the minimum needed to live on. The issue here is affordability.
	I shall not refer to all the tables in the Red Book, but one of them deals with allowances, which are, I believe, the subject of clauses 2 and 3 of the Bill. According to that table, in 1996-97—the last year of the Major Government—the personal allowance for an individual was £3,765. This year it will be £6,475. The Government are saying that they have been able to increase the proportion of their earnings people can keep for themselves by some 75 per cent., but the problem is that meanwhile they are bragging about having increased public expenditure by 100 per cent.—doubling it—in the same period, thereby denying people the opportunity to have more money in their pockets to spend as they wish.
	The position is bad enough for people on relatively low incomes, given that the personal allowance now applies at some £5,400 less than what would be the minimum wage for someone working a 40-hour week. However, that problem is small compared with the problem further up the income scale, where people move from the basic to the higher tax rate. Back in 1996-97 the basic rate limit was £25,500. In the current year it will be £37,400. That is not an increase of 75 per cent., as with the personal allowance, but an increase of only about 40 per cent.
	People who might be described as being on middle incomes are being savaged by increases in what are, in many cases, stealth taxes. The Government do not go up front and say, "The reason why you are paying so much more in tax is that we have refused to index your allowances in line with inflation"—let alone earnings. The burden on what might be described as the most productive part of the economy is becoming unbearable, unsustainable and unaffordable. We have reached a point at which people are saying, "Why bother to work?" because so much of their extra income will be taken in tax.
	Of course, it will always be possible for those who are most mobile to move their businesses and activities overseas. It might be asked what we are to do about our captains of industry and key professionals and entrepreneurs, but I shall not concentrate on that question. A much larger number of people will be adversely affected, as is strongly reflected in my constituency. I am thinking of those who might be described as ordinary hard-working families, who say that they cannot afford this Labour Government and want a general election now.
	I hope that we shall have an opportunity to table amendments to clause 2, which deals with the income tax basic rate limit for 2009-10, and, obviously, to clause 3, which is related. As for clause 4, it appears to me that the Government think it would be reasonable in 2010-11 for someone earning £100,002 to pay back £1 of the last £2 in reduced personal allowance. In addition, they would have to pay 40p in the pound for each of those £2, so that would be another 80p gone. There would be nothing left for them. Some Labour Members may welcome that, but that is the politics of envy. This takes us back to the very high marginal tax rates that the Conservative Government of 1979 had to deal with so quickly when they first came into office. I hope that an incoming Conservative Government in the future will do exactly the same, but I respect the fact that a judgment must be made; until we know when the election will be and we then see the books, we cannot make a decision on that.
	It is great to be able to participate in an open-ended debate, as our speeches in this House are often restricted because of the Government's inability to face up to the fact that democracy involves debate and the exchange of views across the Chamber. Discussion of the Finance Bill is the only occasion when Back Benchers are able to have such a debate, and I am pleased to be able to participate in it. I hope that my Front-Bench colleague, my hon. Friend the Member for Fareham, will not feel inhibited about the length of time that he can take to respond to the debate, and I also hope that the Minister will respond to all the points that have been made.
	I expected my hon. Friend the Member for Stone (Mr. Cash) to refer to clause 56, which deals with MEPs' pay, allowances and pensions under the European Parliament statute. The clause takes us back to other Government broken promises, such as the fact that they promised a referendum but did not give one, and that they promised not to increase the higher rate of tax but are doing just that. It also takes us back to the fact that the people who promote the Lisbon treaty want to move towards having a country called Europe. Fortunately, there is not a country called Europe at present, and as a result, although the salaries of MEPs will be paid by something called the European Community, the explanatory notes on clause 56 state that we do not have a double tax treaty with the European Community because it is not a country, so we have to legislate specifically for this. It is not a territory, and that is why clause 56 is in the Bill. I hope that in due course my hon. Friend the Member for Stone will have a chance to look into the constitutional implications of that.
	Clause 91 sums up the Finance Bill and the attitude of the Government. It
	"requires HM Revenue and Customs (HMRC) to prepare and maintain a Charter. The Charter will set out the standards of behaviour and values to which HMRC will aspire in dealing with taxpayers and others."
	In other words, there is no legal foundation, because there will be no remedy in law for any breaches of the charter. This is just an aspiration. It is a fraud upon the people to suggest that this is a charter. We know that when the Government consulted on the matter
	"they suggested that there was no need for a Charter to be supported by legislation. But most respondents argued that a legal foundation would be the best way of ensuring that the Charter would be an effective and enduring document."
	So what have this Government done? Typically, they have introduced legislation that is absolutely meaningless because "aspire" is a term that cannot be challenged in court. I hope my Front-Bench colleagues will ensure that we have the opportunity to toughen up that clause during the progress of the Bill.
	The Government have been full of aspirations on behalf of the people of this country, but they have failed those people big time. That is why I think that this is an appalling Bill, and I look forward to having the opportunity to vote against it this evening.

Mark Hoban: It is a pleasure to follow my hon. Friend the Member for Christchurch (Mr. Chope), who correctly said that I used to work for him when I was at the London School of Economics. The hon. Member for Ealing, North (Stephen Pound) was there at the same time, but for the avoidance of confusion I must point out that he was a mature student.
	My hon. Friend also reminded me of my first outing on a Finance Bill, in 2002, and the first long debate on the Bill was about alcohol duty. I did not realise that alcopops were the flavour of the month at Christchurch Conservative club, and Britain's high commissioner to South Africa, who was a Treasury Minister at the time, explained that the drink that we all knew as WKD was actually known by young people as "wicked"—it was an educational process for us all.
	I thought that my hon. Friend's forensic scrutiny of the Bill was a bid to join the Public Bill Committee, and if he wishes to participate, I am sure that we will find a place on it for him.
	The length of tonight's debate has been helpful and has given Conservative Members the opportunity to contribute at some length. My right hon. Friend the Member for Wokingham (Mr. Redwood) and my hon. Friends the Members for Chichester (Mr. Tyrie), for Poole (Mr. Syms), for Mid-Worcestershire (Peter Luff), for Bournemouth, East (Mr. Ellwood), for Ludlow (Mr. Dunne), for Braintree (Mr. Newmark), for Beckenham (Mrs. Lait), for Stone (Mr. Cash) and for Christchurch all made excellent speeches, and that is an impressive list of Back Benchers.
	I wish I could say that Labour Members turned up in such numbers to support their own Finance Bill, but Labour Back Benchers made only three speeches. The speech made by the right hon. Member for Birkenhead (Mr. Field) was perhaps not welcome to his Front-Bench team, and even the hon. Member for Wolverhampton, South-West (Rob Marris) was slightly quizzical in his support of the Bill. By contrast, the hon. Member for Edmonton (Mr. Love) was a little ray of sunshine, being the only Member, other than those on the Treasury Bench, who believes that the Government's forecasts for economic growth will be met next year, despite the views of a number of economic forecasters—the International Monetary Fund, the European Commission and a range of others. He was perhaps the only person, apart from the Chief Secretary and the Financial Secretary, who was wholehearted in his support of the Budget tonight.
	One of the themes that recurred was kicked off by the right hon. Member for Birkenhead—the scale of public debt and the fact that the Chancellor announced in his Budget last month that borrowing for this year would be £175 billion and for next year would be £173 billion. It is right that in a Finance Bill debate, in which we debate measures relating to the national debt and public finances, we discuss the size of the national debt and what can be done to bring it under control. The right hon. Member for Birkenhead talked about the need for proper spending controls and the need to establish some control over Government spending. He referred to the lack of discipline in the Government's finances and remarked that the only discipline imposed on the Government is the gilt markets' decision about whether not to fund the Government's borrowing. Although the Government intend to borrow, in terms of national debt, £175 billion this year, their funding requirement is way in excess of £200 billion. It is worth remembering that today the Treasury Committee produced its report on the Budget and was critical of the Government and the lack of any fiscal discipline and rules in place. It said, in its recommendations:
	"We do not see how the Temporary Operating Rule acts as any kind of constraint at all on the current fiscal decisions made by the Chancellor, and we struggle to imagine any course of action he might have taken in this year's Budget that would have been inconsistent with it...It is clear to us that the only real financial discipline that is currently imposed on the Chancellor is the opinion of the gilt market on the sustainability of the public finances."
	Several hon. Members expressed concern about how the Government's funding requirement would be met. The hon. Member for Edmonton, who met the Debt Management Office this morning, was convinced that the funding requirement would be met, but we already know that the DMO has changed its method of placing Government debt to try to maximise the chance of success in funding the debt. My right hon. Friend the Member for Wokingham explained that, given the quantitative easing programme embarked on by the Bank of England and its appetite for buying up gilts—and the reforms to the liquidity rules that the FSA has announced recently—that will provide another source of demand for debt.
	It is clear from the speeches in this debate, from both sides of the House—including the hon. Members for Taunton (Mr. Browne) and for Dundee, East (Stewart Hosie) as well as Labour and Conservative Back Benchers—that the scale of debt and the time it will take to get it under control overshadows not only this Bill, but many Finance Bills to come. It will provide a real challenge to future Governments to get that level of debt under control.

William Cash: Will my hon. Friend touch on the matters that my right hon. Friend the Member for Wokingham (Mr. Redwood), my hon. Friend the Member for Braintree (Mr. Newmark) and I raised about the scale of the debt and the disparity between what the Government are saying and the Treasury Committee is saying? Some of us believe that the percentage of debt is infinitely greater, because the greater the debt the greater the taxes, and the greater the reduction in public expenditure that will be needed. It is seminal to this debate, so could not my hon. Friend the Member for Fareham (Mr. Hoban) give at least a nod in our direction?

Mark Hoban: I am grateful to my hon. Friend for reminding me of that very powerful point that he and others made during the debate. Clearly one of the areas in which there is huge uncertainty is the scale of the Government debt, both on and off balance sheet, and my hon. Friend the Member for Braintree has put together a paper to try to establish that. We have set out proposals for an office for budget responsibility, and one of its first tasks would be to quantify the true extent of Government indebtedness, so that we would know exactly where we were starting from, were we to form the next Government. We would then know the scale of the problem and could educate people about the challenges that we will face in tackling that debt. My hon. Friend the Member for Stone can be reassured that his thoughts have not fallen on deaf ears on these Benches. They may well have done so on the Government Benches, as the Government have always sought to deny the scale of the problem, but we have heard his message loud and clear.
	Two other themes emerged from the debate. The first is the failure of the Budget and the Bill to lay the foundations for the future. In a recession, a Budget should plot a clear path out of the economic crisis and prepare the economy for recovery. It should build the foundations for growth, a better climate for business and a better climate for savings and investment. That was the challenge that the Chancellor was set and the challenge that he failed last month. That failure in the Budget continues through into the Bill, which is a sign that the Government have run out of money, run out of ideas and run out of road. If we are to aid Britain's recovery, we need to make Britain a better place to do business, to retain businesses that are already here and to make Britain a prime location for inward investment. If we are to aid Britain's recovery, we need to tackle those problems so that the economy is built on sure foundations and not on shifting sands.
	The Budget gave the Government the opportunity to do all that by rebuilding savings and investments. The question that businesses will ask is whether Britain is a better place to do business as a consequence of the Finance Bill. Let me give some examples of where I think the Bill lets down businesses. Although there has been a broad welcome of the introduction of the dividend exemption, there are concerns that the cap in worldwide interest is complex and costly to implement. I am afraid to say that even these reforms do not appear to be stopping the flow of companies moving their headquarters out of the UK to more competitive tax jurisdictions. Only last week, Informa, a UK listed company, moved its tax domicile out of the UK to Switzerland because it believed that its taxes would go up as a consequence of the reforms announced in the Finance Bill. Clearly, there is more work to be done to build on those reforms if we are to ensure that we have a competitive economy for the 21st century.
	Another attack on Britain's competitive position in the Bill is clause 92, which requires senior financial officers to sign off that they maintain appropriate accounting systems. Many on the Labour Benches will see that as superficially attractive, but it has been sprung on business without any consultation and on what would appear to be a ministerial whim. It is a bit of red meat to satisfy Labour's union paymasters, but there is a lesson from the States attached to it. We should pay heed in the aftermath of Enron to the changes that the US imposed on accounting systems and controls. They imposed huge new costs on business with few benefits, and as a consequence businesses left the US and came to Europe.
	I believe that the provisions in the Finance Bill are yet another barrier to inward investment—the knee-jerk reaction that puts businesses off being based in the UK. Although Labour MPs might cheer these provisions, it is sadly their constituents who will pay the price. Such moves undermine the attractiveness of the UK as a place to do business and create an impression of an unpredictable, uncertain tax regime where rules can change overnight on a ministerial whim. Being competitive is about more than just rates; it is about certainty and predictability.
	The concerns that were expressed by my hon. Friend the shadow Chief Secretary about striking the right balance between the taxpayer and the tax collector impact on our competitiveness as businesses weigh up the benefits of different regime. Yes, the right regime of deterrents and penalties needs to be in place, but taxpayers need safeguards to ensure that those deterrents and penalties will not be used arbitrarily or unfairly.
	What about the Government's attitude to small companies—the vital engines for economic growth and the backbone of businesses in our constituencies? The Government increased the small companies rate of corporation tax from 0 per cent. to 19 per cent. and it is scheduled to rise to 22 per cent. In this Bill, the rate is held at 21 per cent. Businesses are asking whether it is still the Government's intention to increase the small companies rate to 22 per cent., and perhaps the Financial Secretary will answer that question when he winds up.
	The message to businesses from the Budget and the Finance Bill is clear. The Government have done nothing to improve competitiveness, nothing to make their lives easier and nothing to encourage them to expand.
	The Budget and the Finance Bill were also an opportunity for the Government to boost savings and savers. Radical reforms to the savings regime would help to build solid foundations for a sustainable economic recovery.

Stephen Timms: Thank you, Mr. Deputy Speaker. The Bill underpins our commitment to the short-term support that people and businesses need to help them through the current difficulties, while laying longer-term foundations, so that we can make the most of the new opportunities that will emerge when the upturn comes. The Bill is about fairness, opportunity, and supporting businesses so that we can invest and grow our way out of the recession.
	The shadow Chief Secretary to the Treasury, the hon. Member for Runnymede and Weybridge (Mr. Hammond), made a number of interesting points, and I want to deal with some of them in the time that I have. He asked a question about the tax rate on trusts. Rates were aligned in 2004 to prevent avoidance of the higher rate by routeing income through a trust. The trust rate will be increased in line with the higher rate, so we are not opening up opportunity for trusts to be used for avoidance. Those for whom the lower rate is appropriate can reclaim tax; many do so already. In the case of self-assessment, that will happen automatically. If, as was suggested, the trust is for a vulnerable beneficiary or a bereaved child, for example, an election can be made under the vulnerable beneficiary legislation, which has a special tax regime.
	On bingo, which came up in the debate, we have increased the rate of bingo duty, but withdrawn VAT on participation fees. The overall consequence of that is to reduce the rate of tax on bingo from 24 or 25 per cent. to 22 per cent. I am sure that change will assist those in the bingo industry.
	The shadow Chief Secretary welcomed the announcement in the Budget and in the Bill on foreign profits taxation, and I am grateful to him for that. He made the point that there had been a good consultation exercise, and I thank him for that as well. I hope he will have a word with the hon. Member for Fareham (Mr. Hoban), who took a slightly different position in his winding-up speech. I agree that we have made an important announcement that will increase and improve the competitiveness of the UK.

Stephen Hammond: I am happy to acknowledge the proper consultation that went on in relation to the foreign profits taxation, but can the Financial Secretary tell us why there was no consultation at all on clause 92?

Wheelchair Access for Care Home Residents

Joan Walley: I am grateful to Mr. Speaker for awarding me this debate on housing investment in Stoke-on-Trent. I am also pleased to see the Minister in his place at this late hour and look forward very much to hearing his reply to my remarks.
	Key to this debate is ensuring that the Government understand the importance of housing investment for the people and the city of Stoke-on-Trent. Its importance goes much further than just housing needs, great though they are. Housing investment is fundamental to the entire regeneration of the city and is also integral to wider Government efforts to stimulate growth in the west midlands. If we do not deliver in Stoke-on-Trent, we do not deliver in the region as a whole. I know that my hon. Friend understands that argument, because of discussions that we have had previously.
	I also know that my hon. Friend understands that unless we ensure that housing investment is dealt with in the wider regeneration context, the homes that we build will not be fit for purpose. Homes must be placed in vibrant and sustainable communities where there is access to jobs, transport and amenities—in short, in places where people can and do want to live. The people of Stoke-on-Trent are the best people in the whole country and they deserve the very best housing policies.
	It was in that context that my hon. Friends the Members for Stoke-on-Trent, South (Mr. Flello) and for Stoke-on-Trent, Central (Mark Fisher) and I recently met the Homes and Communities Agency, which has a key strategic role to play. From the meetings that we have had with its chief executive, we believe that the new agency now has an opportunity to get the right action plan for Stoke-on-Trent. Indeed, I would like to share with the House the agency's stated list of priorities. The agency will
	"align housing and regeneration resources to support growth, place-making and housing renewal, and form partnerships and joint ventures to help unlock investment in areas, including economic development, transport, education and health, to create sustainable communities that meet the needs of local people".
	I want us in Stoke-on-Trent to make that the core of housing investment policy. In doing so, it is vital that all the agencies involved, including Advantage West Midlands, work in partnership with us and with Stoke-on-Trent council to ensure that investment is co-ordinated, complementary and community led. Each agency has its own priorities, but the agencies must also recognise their mutual interests and the benefits of working together to pursue them.
	That means that, first of all, we need Government action on the west midlands regional spatial strategy, which is a cause for concern and under review at present. The worst-case scenario for Stoke-on-Trent would be if a green light were to be given for building new houses on greenfield sites outside the heartland inner-city urban areas. I believe that that would undermine the careful and measured proposals from RENEW that would ensure that investment went to the areas characterised by market failure.
	Similarly, it would also be detrimental if the regional development agencies to which I have just referred were to prioritise the big, transformational projects at the expense of the smaller-scale initiatives such as the one in Burslem. I therefore want the Minister to give a clear message to the Cabinet and to the Minister with responsibility for the region that we need Advantage West Midlands to work with us on the housing investment priorities in Stoke-on-Trent.
	I want to touch briefly on the importance of environmental and educational investment, and on how that fits in with the housing agenda. I am pressing Stoke-on-Trent council to submit an ambitious expression of interest in the community energy saving programme under the remit of the Department of Energy and Climate Change. If that is successful, it will lead to improved insulation and energy-saving measures in hundreds of homes.
	There is also a huge opportunity to get a Building Research Establishment centre of excellence located in Stoke-on-Trent, and I want that to be maximised. The centre would conduct much-needed research into improving the energy efficiency of existing homes, and would present a real opportunity to establish Stoke-on-Trent as a centre of excellence in the field. In turn, that would link in with the environmental, housing and jobs agendas, thus fulfilling the need to pursue the holistic approach to regeneration that I believe is crucial. I would appreciate any assurances that the Minister can give me tonight that the Government will work with the RDA and all other partners, including the European Commission, to make sure that the centre can go ahead.
	I am also pressing for the Building Colleges For The Future programme to be taken forward on sites in both Shelton and Burslem, because we need apprenticeships that will produce construction workers with the skills and training to deliver new and improved housing. That would also foster the integration of the homes, work and skills that is so vital to the creation of vibrant communities. I really hope that the Minister, who perhaps has a greater say in these matters than anyone else, will be able to take forward that wider strategic framework for regeneration when he considers decisions over specific housing issues in Stoke-on-Trent.
	I have only a short time available this evening, so I hope that the Minister will forgive me for not going into detail about the huge investment that has already been made under the decent homes standard and which has brought many council properties up to an acceptable level. I am very appreciative of the help that the Government have given through subsidising council rent increases this year, and I am also grateful for the £66.4 million that they have given for housing investment in Stoke-on-Trent for the period 2009-11. However, the fact is that that is just not enough: more is needed, and I hope that the Minister will be able to do even more for Stoke-on-Trent when he comes to make his decisions this week or next.
	Why should the Minister do more for our area? At present, there are 9,105 people on the council house waiting list. Many are there as a result of tenure issues, but every case on the list tells a human story. We have just had the debate about the Finance Bill, and the Government have to tackle housing issues. More than 23 per cent. of private sector homes have a category 1 hazard, and more than 60 per cent. of those are considered non-decent, so if ever there was a case for investment in housing in Stoke-on-Trent, this is it. There are something like 5,700 empty homes in the city, of which 3,500 have been empty for more than six months. I know that the Government have a strong record on dealing with empty homes, but we need to get that record directed and channelled into what is being done on the ground in Stoke-on-Trent. My colleague, Councillor Dave Conway, has done a lot to highlight this issue, and I understand that discussions are taking place about some kind of pilot project that could help us to reduce the number of empty homes by 1,500. I hope that the Minister will be able to look favourably on that, and find a way of helping Stoke-on-Trent to go about doing that work. Perhaps I should add that, as an honorary vice-president of the Chartered Institute of Environmental Health, I believe that environmental health can always assist the work that needs to be done on the ground in Stoke-on-Trent to a much greater extent.
	Of course we have high levels of deprivation and worklessness, and a lack of choice in housing. We have two and three-bedroomed houses, but there is a particular lack of four-bedroomed family houses and houses that are suitable for the elderly. There is also a great need for investment for people with a disability. I have recently had meetings with the Royal British Legion, which feels that there is insufficient support for what is being done on disability adaptations. These issues all need to be addressed.
	There are three things that the Minister could do to help. The first would be to agree the private finance initiative round 5 bid for Stoke-on-Trent. Research has identified that 16 per cent. of the housing stock for older people is not sustainable, and that a further 32 per cent. of the stock requires significant investment in order to be considered sustainable in the medium to long term. There is a pressing need for 1,000 extra care units to meet the needs of an ageing community, and it is for that reason that there is a bid on the Minister's desk for about £120 million to meet this need. This would provide 500 units of extra care housing, and I understand that three sites are being considered to provide a spread of services for older people, but the programme is dependent on the successful approval of the PFI bid. I ask the Minister to give that application the go-ahead.
	Secondly, the PFI round 6 bid is equally important. I am sorry to give the House all these technicalities. This multi-million pound bid, submitted by Stoke-on-Trent council, has been drawn up to address the wider context of the regeneration of the city, which I touched on earlier. If approved, the bid will focus investment on six housing estates on the periphery of Stoke-on-Trent. These are Chell Heath, Fegg Hayes and Norton in my own constituency, and Abbey Hulton, Bentilee, and Blurton and Meir across the rest of the city and in the constituencies of my hon. Friends who are supporting this debate tonight. These estates are characterised by very high levels of deprivation, and they need much more investment in open space. They also have very limited social and retail facilities. I am frequently asked for help to get parks, football pitches and all kinds of social facilities established in them.
	If the bid gets the approval of the Minister and the Homes and Communities Agency, it will enable us to tackle worklessness and to create community empowerment. It would also give us an opportunity to get enhanced design and quality on these estates on the edges of the city. Stoke-on-Trent is not a city with one centre. It is a bit like the Welsh valleys; it is a city with about six towns and many communities within it. The bid would place particular emphasis on more extra care and bungalow accommodation for the elderly. It is essential that, if the Minister does just one thing tonight, it is to give me an indication that when he comes to sign off these bids—I understand that there could be double the number of applications—he will approve that one bid for Stoke-on-Trent.  [Interruption.] Members may well laugh, but it is so important that we get this investment in Stoke-on-Trent.
	Thirdly, we have the housing market renewal programme. It has been well established that in Stoke-on-Trent it was slow to get off the ground. Now that it has got off the ground, it has a huge task in front of it. It was therefore decided that a bid would be submitted to the Government for a 10 per cent. extra allowance for housing market renewal. That would be in the order of £7 million for the next two years. With all the problems we faced with credit and the recession just before the Budget, I understand why the Government chose not to go ahead and agree the additional bids submitted, but there remains an opportunity for some of them to be approved now.
	I would like to put in this bid for Middleport, which is adjacent to Burslem, the mother town of the Potteries, in the wider context of regeneration. We have already had a huge amount to help us start the regeneration programme, but we urgently need to provide more new homes in Burslem town centre. We need to diversify new build by providing more family housing, and we greatly need more development and housing gap funding for semi-derelict sites. We would also like to be able to go ahead with more live/work homes, which have been absolutely transformational in Burslem, particularly in encouraging young people to set up small businesses and live and work in the same place.
	I believe that all those issues are fundamental to getting housing investment right. I have not touched on the need for more council housing, because that goes without saying. I understand that there are opportunities for Stoke-on-Trent to bid for the new money and I hope that the Minister will encourage that.
	I am grateful for the opportunity to raise and flag up these concerns with the Minister. I hope that my debate is timely; that it has come about before he has made any final decisions; and that it will have had a chance to influence him. Above all else, I hope that he will accept my invitation to come to Stoke-on-Trent, to Burslem and to Middleport, and perhaps to celebrate with us what I hope will be agreement by the Government to this much-needed investment.

Iain Wright: I begin by congratulating my hon. Friend the Member for Stoke-on-Trent, North (Joan Walley) on securing this important and timely debate. She has been a tenacious champion of more and better housing not just in her own constituency, but in the wider areas of Stoke-on-Trent and the rest of the west midlands. I have had several meetings with my hon. Friend on these matters, and I am sure that she will recall one such notable meeting that coincided with a fire alarm and subsequent evacuation of the entire building. I do not think that she had anything to do with that; the case was never proven! She has, however, had quite an impact on the Department.
	I have been to Stoke-on-Trent several times to examine for myself the issues of housing and regeneration in the area. I greatly enjoyed my time at Weston Heights in the Colville area, having been invited there by another tenacious champion for housing in Stoke, my hon. Friend the Member for Stoke-on-Trent, South (Mr. Flello). Weston Heights is a landmark regeneration scheme in the city, demonstrating great partnership working, led by RENEW, North Staffordshire, which has produced something like £55 million worth of investment, providing 300 modern, good-quality houses for the people of Colville and beyond. This development very vividly shows what can be achieved in Stoke-on-Trent. I look forward similarly to visiting the constituency of my hon. Friend the Member for Stoke-on-Trent, North very soon.
	I have mentioned partnership working, and in a well-reasoned and passionate argument, my hon. Friend also mentioned the importance of such working between RENEW, North Staffordshire, the Homes and Communities Agency, Advantage West Midlands and Stoke-on-Trent city council in producing co-ordinated and complementary outcomes at both regional and local level, which are also led by the community. She is absolutely right about that, as the relationship between the regional Homes and Communities Agency, the regional development agency and the local authority is the vital key to securing what she referred to as the triumvirate of housing, jobs and skills.
	I congratulate my hon. Friend on her recent appointment to the West Midlands Committee. I urge her to use her powers of argument and her membership of that powerful Committee to ensure that the approach that she has advocated tonight is adopted by the various agencies.
	My hon. Friend mentioned the west midlands regional spatial strategy. As she said, the RSS is currently under review. I understand that the examination-in-public stage began only a couple of days ago. In those circumstances, and given the quasi-judicial role of my right hon. Friend the Secretary of State in the process, I hope my hon. Friend will forgive me for not commenting in detail on her points about the RSS.
	One of the central elements in my hon. Friend's speech was the importance of housing market renewal areas in rejuvenating communities, and the important role that RENEW North Staffordshire has played in realising her vision for her area. We have made allocations since 2004 totalling £167.5 million for RENEW to create a stronger, more stable housing market, and to provide a better future for communities hit by low demand for property and poor-quality housing. In the current financial year, 2009-10, that represents an allocation of £34.2 million, which, as my hon. Friend said, represents 90 per cent. of the indicative allocation announced in February 2008.
	I am keen for RENEW, and indeed all housing market renewal areas, to use the significant local market intelligence that they have acquired over the past few years to help to address the challenging economic conditions that we currently face. It is important for the Government to provide significant investment to give communities real help now. It is also important for that investment to provide direct benefits for people living in housing market renewal areas, and for real and tangible outputs in terms of delivery to ease the current economic conditions now. We, along with the Homes and Communities Agency, want the pathfinders to lead the response to conditions in their areas. We look to them to use their intelligence, to shape local markets, to underpin current activity, and to lead the drive towards effective recovery.
	It is in that context that, in 2009-10 and 2010-11, all pathfinders will receive the 90 per cent. level of funding as a base allocation. When pathfinders demonstrate an active response to market conditions, achieve expenditure and make impacts, we will offer further resources up to the original 100 per cent. budget. In RENEW's case that would mean that an additional £3.8 million could be made available this year, which would help my hon. Friend's area. I am keen to allow that to go ahead to provide real help for RENEW's areas of investment.
	Arrangements for accessing the additional funds are currently being worked out by the Homes and Communities Agency and by me, and the HCA will notify pathfinders of the outcome in due course. Meanwhile, I am due to meet chairs and chief executives of pathfinders in the next week, when I shall want to set out further our wish for clear and achievable criteria on the basis of which the additional money could be obtained by pathfinders.
	I hope that that clear expression of my intention reassures my hon. Friend that money would be available if direct and tangible benefits were provided by RENEW. In the meantime, the £34.2 million already awarded for 2009-10 will enable RENEW to undertake the refurbishment of 700 homes, the acquisition of 220 homes, the demolition of 300 homes that have reached the end of their useful life, and the construction of 150 new homes.
	Although RENEW North Staffordshire is an important vehicle for the achievement of regeneration and growth, it is not the only vehicle. The provision of new homes in Stoke-on-Trent, particularly affordable homes, is something that this Government hold dear. That is why, last year and this year, we have already contracted—through the national affordable housing programme, the national clearing house scheme and HomeBuy Direct—for more than £27 million in Stoke to deliver an additional 400 affordable homes for social rent and low-cost home ownership, with more in the pipeline.
	My hon. Friend will be well aware of our commitment to delivering affordable homes both despite and because of the current difficult economic conditions. Let me give her an example in her constituency. A major housing development in Greenhead street, Middleport, stalled recently owing to the prevailing economic conditions. We were already involved with the development through the Homes and Communities Agency in the west midlands, providing £2.7 million of gap funding to support the delivery of 320 new homes. We were made aware of the problems in delivering homes on this development, and held discussions with key partners and the developers with a view to helping them during these difficult times, and with the twin aims of keeping people in work and making sure that the homes we need get built. This resulted in a further £2.5 million being provided to the registered social landlord partner, Countryside, through the national affordable housing programme, to support the delivery of much-needed affordable homes. This timely intervention has enabled the development to continue.
	This example demonstrates that investment to revive stalled housing schemes can play a decisive role in housing delivery and regeneration. I hope, therefore, that my hon. Friend will welcome the Chancellor's Budget announcement that a further £400 million will be made available to ensure that stalled developments will go ahead. We estimate this will create or safeguard 30,000 jobs in the construction industry and ensure the delivery of an extra 10,000 homes, and I hope my hon. Friend will ensure that Stoke plays a part in that.
	Despite the difficult economic conditions, we remain committed to the delivery of affordable housing, and our aspiration is nationally to reach 70,000 homes a year by 2010-11, including 45,000 homes for social rent. To help us deliver this target, we want to give all local authorities, including Stoke-on-Trent, the opportunity to play a bigger role in the delivery of affordable housing where this can be done cost-effectively, and we also want to allow councils to bid for social housing grant from the Homes and Communities Agency should they wish to do so. My hon. Friend mentioned the important role that local authorities can play in the delivery of housing, and I agree. We have just consulted on new freedoms for councils which could remove some of the old barriers and disincentives that councils face in building new homes. Specifically, we have consulted on whether councils should keep all the rental income from the new homes they build, and whether they should keep the full capital receipts if those homes went on to be sold under any future right to buy.
	I have already mentioned the Budget. My hon. Friend will be aware that an extra £100 million was made available in the Budget to allow local councils to build good-quality, energy-efficient homes.
	In the meantime, over the last two years we have also supported Stoke-on-Trent city council's delivery of housing, to the tune of almost £21 million to the regional housing pot. This comprised about £14.5 million for the regeneration of existing housing stock in addition to the previously mentioned allocations to RENEW, and more than £6 million to bring the council's housing stock up to the decent homes standard.
	Stoke-on-Trent city council advises my Department that all of its homes will be decent by 2010, and to help them and other authorities achieve this, as part of the recent fiscal stimulus package we announced the bringing forward of expenditure through the major repairs allowance to sustain and accelerate the decent homes programme. I am pleased to report that Stoke-on-Trent successfully bid to bring forward expenditure worth almost £3 million from 2010-11 into 2009-10, one of only three local authorities to do so in the west midlands.
	I am also delighted to report to the House that in the past two years we have fully met Stoke-on-Trent's bids for disabled facilities grant. Let me remind Members that this is a small but vital grant that enables assistance to be given to some of the most vulnerable people in our community, thereby enabling them to remain in their own homes. For Stoke-on-Trent, this amounted to £1.8 million over the two years.
	I know that my hon. Friend is very concerned about rounds 5 and 6 of the housing private finance initiative. She mentioned that Stoke-on-Trent city council submitted an expression of interest for a comprehensive housing-led regeneration scheme, and that it is eagerly awaiting a decision on this. I am afraid I cannot give her the news on that tonight. However, I can say that we received a large number of high-quality expressions of interest in this initiative from various other parts of the country. We are currently considering the Homes and Communities Agency recommendations, and an announcement on the outcome will be made shortly. I shall certainly ensure that my hon. Friend is made aware of any news.
	I congratulate my hon. Friend again on securing this debate. I commend her ambition and determination for her area, and I hope that I have demonstrated to her that the Government match her determination and ambition in delivering more and better homes in Stoke- on-Trent. This demonstration has been matched by significant and, indeed, unprecedented investment in housing and regeneration by this Government for her area. In difficult economic times, this investment will continue to provide real help now for people and businesses in Stoke, and to ensure that the city has the housing stock that she knows that it wants and deserves. I look forward to visiting her constituency soon, to see for myself the plans that she has for Stoke-on-Trent. Again, I thank her for the opportunity to debate this important issue, and I look forward to seeing her soon.
	 Question put and agreed to.
	 House adjourned.